Budget 2024: What’s likely to be in it – and what isn’t?
Briefings and speculation are rife over what will be included in the chancellor’s budget on Wednesday, particularly the scale of tax rises.
The biggest expected revenue raiser, set to generate as much as £20bn for public services, is a hike in employers’ national insurance.
Government sources have given strong indications of the chancellor’s thinking, prompting questions about whether this breaks Labour’s manifesto commitment not to hike the three main taxes – income tax, national insurance and VAT for “working people”.
Hikes in capital gains tax and inheritance tax have been touted as ways the Labour government could find money to balance the books and fix public services.
In a speech on Monday, the prime minister confirmed that tax rises were on the way: “Borrowing will drive long-term growth. Tax rises will prevent austerity and rebuild public services. We choose to protect working people. We choose to get the NHS back on its feet. We choose to fix the foundations, reject decline and rebuild our country with investment.”
He also confirmed two measures that will be in his budget which will be delivered by Chancellor Rachel Reeves.
What we know already
The first is a pledge of £240m in funding for services to get people back in to work which will enable work, skills and health support to be offered to disabled people and long-term sick.
Unveiling the announcement, the PM said his budget will “get Britain working”, adding: “It will pave the way for reforms that tackle the root causes for economic inactivity and make sure that those who can work do work.”
Sir Keir Starmer also confirmed the £2 bus fare cap will be replaced by a new £3 cap until the end of 2025 in the budget.
Bus fares have been capped at £2 on more than 4,600 routes in England since 1 January 2023.
Hundreds of operators outside of London have been part of the scheme, which has cost around £500m.
The rest of the budget’s contents will be only be official when Ms Reeves sets it out on Wednesday, but these are some measures Sky News expects – and doesn’t expect – to be included.
No rises to income tax, national insurance or VAT
Labour ruled out increasing income tax, national insurance and VAT in its manifesto before getting elected, promising to protect “working people” – though who they define as a “working person” has come into question of late.
The chancellor is also expected to prolong the freeze on income tax thresholds by two years to 2030 after the previous Conservative government froze them until 2028.
Employers’ national insurance hike expected
The amount employers pay in national insurance is set to rise by up to two percentage points, and the money will – in part – be used to help inject £10bn into cutting NHS waiting lists.
A government source told Sky News: “There is a universal consensus that the NHS needs more money.
“That means asking businesses to help out.
“The choice is investment versus decline. She [Rachel Reeves] is choosing not to ask working people to pay the price for their [Conservatives’] failures.”
Housing
The government has confirmed a large boost in affordable housing will be in the upcoming budget.
It says there will be £500m in new funding to help build up to 5,000 social homes and bring total investment in housing supply to £5bn as part of the government’s Affordable Homes Programme.
£1.4bn for crumbling schools
The chancellor has promised her budget will include £1.4bn to rebuild crumbling schools.
She said children “should not suffer” due to the UK’s depleted public purse, while economists said the funding would generally ensure existing plans keep going, rather than pay for many new initiatives. Teachers said much more cash was needed.
The Treasury said the £1.4bn would “ensure the delivery” of the school rebuilding programme, which was announced in 2020 under then prime minister Boris Johnson.
Funding for nurseries, breakfast clubs and childcare
The Treasury has also confirmed £1.8bn would be allocated for the expansion of government-funded childcare, with a further £15m of capital funding for school-based nurseries.
The Treasury said the first stage of the plan would pay for 300 new or expanded nurseries across England.
Ms Reeves also said she would “triple” investment in free breakfast clubs to £30m in 2025-26, after she announced at Labour’s party conference in September a £7m trial across up to 750 schools starting in April.
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VAT exemption for private schools to be scrapped
Labour have long made clear their plans to scrap the VAT exemption and business rates relief for private schools in a bid to fund 6,500 new teachers in state schools.
Details of the government’s assessment of the expected impacts of these policy changes will be published when the budget comes out on 30 October.
This is only two months before the policy is due to come into effect on 1 January 2025, and will likely include details of whether schools will be forced to increase their fees.
It is now expected that military families, a number of whom send their children to private boarding schools because they could be posted abroad at short notice, will be exempt from paying increased fees.
Billions to be allocated to NHS
The government is expected to put aside up to £10bn for the NHS, largely to help it tackle ballooning waiting lists after COVID, currently at a record high of 7.6 million, and to deliver on their promise of another 40,000 hospital appointments per week.
Health Secretary Wes Streeting last week said he has agreed on a plan for NHS funding with the chancellor – but noted the funds won’t actually be available until six months’ time.
“Investment in the budget, that comes in the new fiscal year in April, so that’s spring,” he said.
Labour are facing “difficult and big choices”, Mr Streeting warned, as he said the government “can’t fix 14 years in one budget”.
Carer’s Allowance expansion
Ms Reeves is expected to raise the limit people can earn before being ineligible for the Carers Allowance from £151 a week to £181.
It would mean tens of thousands of carers who aren’t currently eligible would get an extra £81.90 a week under the scheme.
The budget is set to take place at 12.30pm on Wednesday 30 October.
