Last week, Labour put forward its first budget in 14 years following the party’s historic election win in the summer.
Chancellor of the Exchequer Rachel Reeves announced a wide range of measures on Wednesday designed to address the 'black hole' in public finances.
Among the plans announced was a commitment to maintaining the pension triple lock, a rise in education spending, and an increase in the national minimum and living wages.
The Chancellor announced tax rises of £40 billion. Among the measures are a 1.2 percentage point increase for employers’ national insurance contributions to 15 per cent in April 2025. The threshold for paying them will fall from £9,100 per year to £5,000.
The headline rates of capital gains tax will increase, with the lower rate rising from 10 per cent to 18 per and the higher rate from 20 per cent to 24 per cent.
The stamp duty land tax surcharge for second homes will increase by two percentage points to five per cent alongside changes to inheritance tax, including bringing pension pots within the with tax from April 2027 and reforms to agricultural and business property reliefs, raising a total of £2 billion a year.
The national minimum wage will rise by 6.7 per cent to £12.21 an hour after asking the Low Pay Commission to take the “cost of living” into account whilst a “flat rate duty” on vaping liquid will be introduced from October 2026.
Taxes will also increase on tobacco. Meanwhile draught duty on alcoholic drinks will fall by 1.7 per cent, meaning “a penny off a pint in the pub”.
On public services, the Chancellor said there will be “no return to austerity”.
Ms Reeves announced a £22.6 billion increase in the day-to-day health budget as well as a £3.1 billion increase in the capital budget, which she called the “largest real-terms growth in day-to-day NHS spending outside of Covid since 2010”.
Defence spending will rise by £2.9 billion next year, and provide £3 billion of support to Ukraine each year.
The core schools’ budget will rise by £2.3 billion next year, with an extra £1 billion funding increase to special educational needs provision. Investment in breakfast clubs will be tripled, Ms Reeves added.
HS2 will be brought to Euston Station in London and rail links will be upgraded between York, Leeds, Huddersfield and Manchester but there was no mention of the upgrade to the Cumbrian coast line as promised by the Conservatives or the £1 billion upgrade to the A66.
Labour MP for Carlisle, Julie Minns said that the party were making the “tough but correct decisions” for the country.
“Julie Minns, MP for Carlisle, said: "The first Labour Budget in fourteen years was a step towards fixing the broken foundations of our economy.
"Yet again, Labour is having to clean up the mess left by the Conservatives - but this Budget has put us on a strong footing to deliver a stable and prosperous economy which is attractive for business and investors.
"We are making the tough but correct choices – more money in the pockets of working people, more support for carers, and more investment where it matters – in health, education and transport."
Despite positive reaction from the region’s MPs, business leaders have expressed their concerns about the 'extremely disappointing' Budget and the impact it will have on Cumbrian businesses.
The announcements have not been welcomed by many local businesses who feel disappointed and concerned with the decisions taken by the government which they believe 'punishes' UK businesses.
Nicky Gordon, managing director of Genesis Homes, said: "Today is a really challenging day for UK business owners as the Budget only compounds the misery of what has been a difficult trading period stretching back to the outbreak of Covid-19.
"It is a deeply worrying time for private business and enterprise as businesses are being punished with increased costs through taxation, and businesses like ours will feel the additional effects of increases to stamp duty rates for second homeowners.
"This Budget is extremely disappointing and only causes more concern among UK businesses. We had all hoped for more stimulus-based Budget announcements after promises of positive change, but instead we are being punished."
Nicky’s concerns over the budget were shared by a tax partner at Armstrong Watson who said the budget would have a ‘significant impact’ on businesses.
Becky Bowness, tax partner at Armstrong Watson, said: "The increase in national minimum and living wage coupled with the increase in Employers National Insurance contributions (and the reduced threshold when this is payable) will have a significant impact on businesses despite the increase in Employment Allowance for small businesses.
"Inevitably, this will have an impact on employees as businesses may not be able to pass this cost on in full to their customers, so we could see cuts in headcount and reduction in pay increases."
The new shadow chancellor, whose appointment has been backed by former Carlisle MP, John Stevenson, has already criticised the budget.
Mr Stride said: “The party opposite, the Government, in the last election said they would be ushering in a new form of politics. One based on transparency and integrity.
“And when they were pressed as to what they would be doing in terms of tax rises, they ruled out a large number of taxes, and one of those was national insurance.”
“And yet, just some short weeks later, in this Budget, what has happened? We have seen employers’ national insurance raised, a direct contravention, breach of their manifesto.”
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Labour have set out their vision for how the country will go forward and are confident that the plans can deliver the growth that they promised during the election.
They have been criticised from the right for being too radical and criticised from the left for being not radical enough, but Labour remains steadfast in their belief that this budget will help the country ‘turn a corner’.
Whether it can deliver on their promise remains to be seen.
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