Rachel Reeves is set to deliver Labour’s first Budget in more than 14 years on Wednesday.
The Chancellor will pledge to put “more pounds in people’s pockets”, fix the NHS and grow the economy.
In her speech, Ms Reeves is expected to say the “prize on offer” for Labour’s plans is “immense”, and will lay out new funding to cut hospital waiting lists, pave the way for more affordable homes and rebuild crumbling schools.
A hike in the minimum wage to £12.21 an hour is among the measures included in the speech at 12.30pm.
But millions of people in London and across the UK will bracing themselves for expected tax rises, despite a Labour manifesto pledge not to increase the headline taxes on the pay cheques of “working people”.
Alongside its Budget analysis, fiscal watchdog the Office for Budget Responsibility (OBR) will publish a report on the Conservatives’ legacy in government, which is expected to account for the so-called £22 billion “black hole” in the public finances.
Follow the latest developments below….
How will the Budget affect income tax?
09:56 , Lydia Chantler-Hicks
Labour has pledged not to raise the rate of income tax, VAT or National Insurance, caveating this by saying that this manifesto promise only applies to “working people”.
But the Chancellor is reported to be considering freezing the thresholds for paying the different rates of income tax for another two years beyond 2027/28.
The average median annual pay for full-time employees in London was £44,370 in 2023, according to the Office for National Statistics, compared to a UK average of £34,963.
So, significantly more Londoners will be dragged into paying the higher rate of income tax, than other regions, by freezing the threshold for this 40p rate at £50,270.
Cabinet pictured arriving at Downing Street
09:41 , Lydia Chantler-Hicks
Cabinet ministers have been pictured arriving in Downing Street this morning, for a Cabinet meeting ahead of Chancellor of the Exchequer Rachel Reeves delivering the Government’s first budget.
NHS waiting lists to ‘tumble’, says Wes Streeting, but another difficult winter ahead
09:33 , Lydia Chantler-Hicks
The Budget’s tax hikes and borrowing increases may not be enough to undo “14 years of damage” to the NHS, the Chancellor has warned.
Ms Reeves is expected to pump billions of pounds into the health service when she unveils her Budget, including £1.5 billion for new surgical hubs and scanners and £70 million for radiotherapy machines.
Health Secretary Wes Streeting warned “it will take time to turn the situation around” but said injection of funding would help meet Labour’s pledge to deliver two million extra NHS appointments a year.
He said waiting lists, currently at 7.6million, will start to “tumble” and be millions lower within years, with 40,000 more appointments planned per week.
But he warned of another difficult winter with some patients still expected to be waiting on trolleys and in hospital corridors.
How will the Budget affect inheritance tax?
09:25 , Lydia Chantler-Hicks
The Chancellor is reportedly planning major reforms to inheritance tax.
Inheritance tax is charged at 40 per cent on the property, possessions and money of somebody who has died, above a threshold of £325,000.
If passing on a main home to children or grandchildren that threshold can rise by a further £175,000, taking it to £500,000.
So for a couple, they can currently leave up to £1 million tax-free.
More than half of inheritance tax paid in England comes from estates in London and the South East, where there are far more properties worth in excess of £1 million than elsewhere in the country.
People can currently gift money which is tax-free provided they live for another seven years, but Ms Reeves may extend this to 10 years.
Loopholes may also be closed which are allowing some of Britain’s biggest landowners to pay a far reduced rate of inheritance tax.
Read more about the expected changes here.
Fears employers will struggle following hikes to minimum wage
09:15 , Lydia Chantler-Hicks
As the Chancellor announced she will be raising the minimum wage for lowest-paid workers, the Low Pay Commission warned some businesses are already beginning to struggle with increases that have seen the minimum wage rise faster than inflation over recent years.
Baroness Philippa Stroud, chairwoman of the Low Pay Commission, said: “The Government have been clear about their ambitions for the national minimum wage and its importance in supporting workers’ living standards.
“At the same time, employers have had to deal with the adult rate rising over 20% in two years, and the challenges that has created alongside other pressures to their cost base.”
She added: “The data show some signs of employers finding it harder to adapt to minimum wage increases.”
John Foster, chief policy and campaigns officer at the Confederation of British Industry, said: “With productivity stagnant, businesses will have to accommodate this increase against a challenging economic backdrop and growing pressure on their bottom line.”
Millions to receive salary boots as minimum wages hiked
09:08 , Lydia Chantler-Hicks
Ahead of today’s Budget, the Chancellor has already confirmed the minimum wage will be rising to £12.21 an hour next year – an increase of 6.7%.
The increase, recommended by the Low Pay Commission, will mean an extra £1,400 a year for a full-time worker earning the main minimum wage rate – known as the national living wage – from April.
But it still falls short of the £12.60 per hour UK living wage calculated by the Living Wage Foundation.
The Chancellor has also announced that the minimum wage for people aged 18-20 would rise to £10 an hour, an increase of £1.40.
That rise is the highest such rise on record as the Government looks to extend the main adult rate to 18-year-olds in future.
The minimum wage for apprentices and those aged 16-17 will also increase by a significant 18%, reaching £7.55 an hour, meaning a total of 3.5 million workers are expected to receive pay rises in April as a result.
Read more here.
How will the Budget affect stamp duty?
08:58
Home buyers face higher stamp duty following today’s Budget, if the Chancellor does not freeze current thresholds.
The Tories raised the “nil rate” threshold from £125,000 to £250,000, and for first- time buyers it rose from £300,000 to £425,000.
But the new Labour government has not committed to extending the higher thresholds at which people start paying stamp duty, beyond the end of March next year.
How will that affect London buyers?
Given that house and flat prices are so high in London, it is extremely hard to find a property for less than £250,000.
But the higher threshold of £425,000 for first-time buyers will have helped many Londoners get on the property ladder, or at least save money while doing so. Going back to the previous system will make it harder in future for those seeking their first home in the capital.
If Ms Reeves does not freeze thresholds at their current levels, first-time buyers will pay an extra £6,250 in stamp duty on a £425,000 home from Spring.
Read more here.
Chancellor expected to assure nation that her Budget will help deliver ‘immense’ rewards
08:45
The Labour Government said after entering office that it needed to fill a £22 billion “black hole” in the public finances.
But Ms Reeves is said to have since identified a far larger £40 billion funding gap, which she is now seeking to plug to protect key government departments from real-terms cuts and put the economy on a firmer footing.
Millions of people in London and across the UK are bracing themselves for expected tax rises to help plug the huge black hole.
Following weeks of pessimistic statements from Labour about the the state of the nation’s finances, the Chancellor is expected to strike a more optimistic tone as she unveils her Budget later.
She is expected to assure the nation that the “prize on offer” for Labour’s plans is “immense” – and lay out new funding to cut hospital waiting lists, pave the way for more affordable homes and rebuild crumbling schools.
How will tax rises hit Londoners?
08:34 , Lydia Chantler-Hicks
Rachel Reeves is set to unveil a raft of tax hikes in the Budget, many of which will hit London and Londoners.
The Chancellor is seeking to find a reported £40 billion from taxes rises and Whitehall savings in her Budget – with the bulk coming from the former.
Capital gains tax is expected to rise 33 per cent, while major reforms to inheritance tax are also reportedly being planned.
The Chancellor is also pressing ahead with imposing VAT on private school fees from January.
For a full breakdown of the expected tax reforms and the impact they will have on Londoners, click here.
What time will Rachel Reeves make her Budget speech?
08:29 , Lydia Chantler-Hicks
The delivery of a Budget by Rachel Reeves – the UK’s first female Chancellor – will mark a historic moment in British politics.
She will give her speech to a packed Commons Chamber after Prime Minister’s Questions ends today.
PMQs begins at midday. It is scheduled to last around 30 minutes and tends to end pretty on time on Budget day, so Ms Reeves is likely to begin her address sometime around 12.30pm.
You can read more about Ms Reeves’ speech, and how long is likely to last, in this piece by The Standard’s Political Editor Nicholas Cecil.
Budget day dawns
08:23 , Lydia Chantler-Hicks
Good morning, and welcome to The Standard’s live blog.
Today marks a huge day in Westminster as Chancellor Rachel Reeves is set to deliver Labour’s first Budget in more than 14 years.
And it’s going to be a big one – with a raft of tax rises expected to be announced alongside spending cuts.
We’ll be bringing you live updates, explainers, and reaction throughout the day. Follow along for everything you need to know.