Chancellor Rachel Reeves is set to deliver a crucial autumn budget this Wednesday, pledging to directly address the UK's persistent cost of living crisis while implementing a significant tax-raising package to fill a £20 billion financial hole.
In weekend articles, the Chancellor acknowledged that the economy "feels stuck" for many Britons and that soaring prices disproportionately affect ordinary families. Her budget will therefore aim to "grip the cost of living" through a combination of support measures and revenue-generating policies.
Key Budget Measures and Tax Changes
Reeves is expected to announce several major fiscal changes designed to stabilise public finances. Despite ruling out further increases after last year's hike to employer National Insurance, the Chancellor is proceeding with a new multibillion-pound tax plan.
The central proposals likely to be unveiled include:
- Extending the freeze on income tax thresholds until 2030, a move that will drag more earners into higher tax brackets as wages increase.
- Reducing the generosity of salary sacrifice schemes, including those for pension contributions.
- Introducing higher taxes on the most expensive properties, potentially through a new surcharge.
- Establishing a pay-per-mile scheme for electric vehicles to compensate for lost fuel duty revenue.
Notably, the Chancellor has reportedly backed away from a direct increase in income tax rates, which had been under serious consideration for weeks.
Political Pressure and Criticism
The budget plans have drawn immediate criticism from across the political spectrum. From the left, Green Party leader Zack Polanski and Unite union's Sharon Graham are demanding a more robust wealth tax, arguing that the current proposals place undue burden on working people.
Polanski stated on the BBC's Sunday with Laura Kuenssberg that it was "outrageous" it had taken Labour so long to act, while Graham urged Reeves to "be Labour" and implement a proper wealth tax alongside more flexible fiscal rules for government borrowing.
Conversely, Tory leader Kemi Badenoch accused the Chancellor of implementing a stealth tax through the threshold freezes, claiming this breaches Labour's manifesto promise not to raise taxes on working people. Former Conservative chancellor Jeremy Hunt highlighted concerns about wealthy individuals leaving the country due to taxation, citing billionaire Lakshmi Mittal's reported departure.
Meanwhile, Labour leader Keir Starmer, speaking from the G20 summit in South Africa, declined to guarantee future budgets would be tax-free, emphasising his desire for the budget to focus on "growth and stability."
Support Measures for Households
Alongside the tax measures, the budget is expected to include direct support for struggling households. Reeves has signalled her intention to scrap the controversial two-child welfare limit and implement a freeze on rail fares, providing some relief from rising transport costs.
These moves are part of the Chancellor's dual approach: providing immediate help for those feeling the pinch of high prices while attempting to place the nation's finances on a more sustainable long-term footing.
With the budget announcement imminent, all political and economic eyes will be on Westminster this Wednesday to see how these competing priorities are balanced in the government's final fiscal plan.
