Labour's first budget marked a historic shift, the first female chancellor Rachel Reeves announced the largest tax-raising plan in a generation. With £40 billion in tax hikes, she described Labour’s strategy as essential to “wipe the slate clean” and stabilize the UK’s finances. But while the ambition seemed bold, questions remain: is it truly enough to meet the challenges ahead?
In today’s newsletter, our policy panel dives deep into these tax and spending plans, evaluating what this budget really means for health, welfare, and economic equity across the UK. Read on for their insights as they unpick what works—and what might still be missing from Labour’s vision for Britain.
A step forward for the NHS, but patients need more
Siva Anandaciva, Chief Analyst at The King’s Fund:
The government has said that “change must be felt”, but it is unlikely that patients will feel much immediate change from the health spending announcements made today.
That’s not to say that there aren’t positives from the Budget. A boost in capital investment to help fix knackered NHS buildings and equipment is welcome. Increasing tobacco duties and the soft drinks levy will improve the nation’s health. The 3.8 per cent real-terms average uplift over two years to the Department of Health and Social Care budget will sustain services, and go towards existing commitments for new staff pay deals and rising costs of delivering care.
But there will need to be more investment in next year’s comprehensive spending review if the government really wants to ‘fix’ the NHS they say is ‘broken’. With dire NHS performance, a £13.8 billion maintenance backlog for the NHS estate, a social care system desperate for reform, today can only be the first step, not the last step, to putting the health and care system back on its feet.
The rich still aren’t paying their fair share
Will Snell, Chief Executive of Fairness Foundation:
Did this budget take us nearer to a fairer society? We think of fairness in relation to taxes and public spending in terms of fair exchange: if we can, we contribute to society through taxes, and in return we are supported by society at various points throughout our lives.
Wealth is heavily under-taxed compared to work in Britain, and today’s budget didn’t go far enough in redressing this balance. Reforms to inheritance tax and capital gains tax are welcome, but could have gone further; many wealthy people will still pay a far lower effective tax rate than average earners. Increasing employers’ national insurance contributions will bring in significant revenue, but will widen existing inequalities between the taxation of employment and self-employment.
On the spending side, today’s budget does provide a welcome funding increase for some public services, but not at the level that is needed. The extra money will reduce the risk that some services collapse completely, and the minimum wage increase will help workers keep pace with rising costs, but the changes announced today will not deliver the big reduction in inequality and poverty that we need in order to build a fairer society and achieve the government’s missions.
Relief at last for Northern communities
Dr Ryan Swift, Research Fellow at IPPR North:
Northern councils will be relieved by today’s Budget which brought positive news for local government funding. After bearing the brunt of austerity over the last fourteen years, they will no doubt be pleased to hear that the Chancellor has boosted core local government funding, reformed funding allocations to take greater account of need, and began to move to multi-year funding settlements.
These are moves that we at IPPR North have previously called for because doing so will provide greater clarity and stability for local leaders so that they can begin to heal from austerity and deliver for their communities.
The budget also provided the welcome news that the government will change the fiscal rules – on matters like tax and spend - that bind them. This is the sensible thing to do and will unlock space for investment. For too long, levels of investment in the UK have been amongst the lowest in the OECD. This is especially true in the North, where our analysis shows that if the North were a country, it would have the second lowest levels of investment in the OECD, behind only Greece.
This investment, which will go into our councils, schools, hospitals, public transport, roads, and green industries will begin to help to rebuild the North. By laying these foundations, the Chancellor could be kick-starting her promised decade of national renewal – but further ambition at the multi year Spending Review and efforts to ensure that everyone can benefit from a growing economy will be important next steps.
Little meaningful support for disabled people
Mikey Erhardt, Campaigner at Disability Rights UK:
The budget is not just a matter of statistics or graphs; it sets out our community's day-to-day reality. Our access to energy, food, and medication, education and social care support has been drastically cut over the last few years, and the budget will do little to address this.
As much as media commentators focus on headline figures for areas in desperate need, such as local government and our broken SEND system - they have thus far failed to ask: is this actually enough?
Immediate support is welcome, and we hope it helps stabilise those parts of our public services closest to collapse, but how much better will people's lives get with a 1.5 per cent real terms uplift for public services from this year in day-to-day spending? Especially as economists are already suggesting that average household disposable incomes will fall over the life of this budget, will our public services be able to cope?
The budget is a failure to make real change. The government had a chance to lay out a new vision for our social security system, but they've followed the same old tired formula - social security cuts positioned as reform. As welcome as changes to universal credit debt deductions are, not increasing local housing allowance, stopping planned changes to the work capability assessment and ploughing on with the reckless Fraud Error and Debt bill will leave many Disabled people worse off after the budget than before.
A missed opportunity for a wealth tax
Rebecca Gowland, Executive Director at Patriotic Millionaires International:
Well there was a lot in that Budget! Much to be celebrated on investment and a lot to consider on tax. Some of the tax reforms introduced represent a clear step towards progress - but we wish the Chancellor had better grasped the nettle on taxing the super rich.
Closing inheritance tax loopholes on pensions, agriculture, and business reliefs is good news - as is the continued commitment to tackle tax avoidance and to abolish the non-dom status. This should be celebrated. But, this Budget also represents a missed opportunity to make sure the very wealthiest are those who are paying most.
The latest (and best) research on what to do with capital gains recommends that we need to equalise it with income (with some changes to the base). If the Chancellor had done this the country would have been £14 billion a year richer - and it would mean that passive income was paying the same tax as income from work. In future Budgets we hope the Chancellor considers serious structural reform to reshape our economy, including the introduction of a wealth tax. This should have been on the table. To genuinely meet the scale of today’s challenges and rebuild a fairer, stronger country, today should be the very beginning rather than the end of change. This Government should advance tax reforms that increase contributions from the wealthiest in the UK - the majority of whom would be proud to do so.
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