Budget 2024: Reeves admits ‘taxes will need to rise’ in stark warning to public

Rachel Reeves’ Budget is a make-or-break moment for Sir Keir Starmer’s government, potentially sparking a decade of national renewal – or sowing the seeds of Labour’s downfall.

The prime minister’s poll ratings are at rock bottom after just over 100 days in charge, and the much-hyped “tough choices” to be unveiled on October 30 will likely do little to help boost his appeal.

Labour is expected to extend an income tax measure that has been described as a “stealth tax” at the upcoming Budget as more people are set to pay higher rates.

Officials have said Rachel Reeves is looking to extend the freeze on income tax thresholds, which has dragged millions of earners into paying higher rates of income tax since 2021.

Rachel Reeves has announced a change to the fiscal rules ahead of next week’s budget, allowing her to borrow billions more each year.

The chancellor today confirmed her rules will “make space for increased investment in the fabric of our economy”, amid widespread expectation she will change the way debt is measured.

Rachel Reeves will turn on the spending taps to upgrade Britain’s creaking infrastructure and invest in the clean energy transition, she will tell world leaders today.

The chancellor is planning to change the government’s fiscal rules to free up billions of pounds of borrowing, which she will promise to spend laying “the foundations of future growth”.

The chancellor has published an article for the Financial Times where she discusses her fiscal rules. It’s the strongest hint yet that she will be revising Labour’s rule around debt on 30 October:

“My fiscal rules will do two things. The first and most important: my stability rule will mean that day-to-day spending will be matched by revenues.

“Given the state of the public finances and the need to invest in our public services, this rule will bite hardest. Alongside tough decisions on spending and welfare, that means taxes will need to rise to ensure this rule is met. I will always protect working people when I make these choices, while taking a balanced approach.

“Crucially, my stability rule will also cover the interest on our national debt and unlike the previous government I won’t cut capital budgets to make up for shortfalls in the day-to-day running costs of departments.

“My second fiscal rule, the investment rule, will get debt falling as a proportion of our economy. That will make space for increased investment in the fabric of our economy, and ensure we don’t see the falls in public sector investment that were planned under the last government.

“We will invest alongside business, through expert bodies like the National Wealth Fund, multiplying the impact of public money. And I will invest wisely — we won’t just increase investment, we will also invest differently. We won’t repeat the costly mistakes of the past.”

Speaking while travelling to Samoa for a meeting of Commonwealth leaders, Sir Keir addressed Labour’s inheritance from the Conservatives head on, saying: “I am not prepared to walk past it.”

“Obviously there are other Budgets to come but this is a significant one which will set the approach, the framework if you like, and it will give a sense of how we intend to do business.

“We are going to tackle the inheritance in this Budget.

“I’m not prepared to walk past it. I’m not prepared to put it off and that is a signal of the way I want to do business which is not to pretend our problems aren’t there, it’s to actually roll up our sleeves and deal with it.”

Sir Keir Starmer has said the Budget will “face up” to the reality of Labour’s inheritance from the Conservatives as Rachel Reeves prepares to borrow tens of billions of pounds to invest in Britain’s crumbling infrastructure.

Ahead of the party’s first Budget in 15 years, the prime minister promised to tackle the hole left in Britain’s public finances and give the public “a sense of how we intend to do business” going forward.

Rachel Reeves will reportedly unveil a major change to Labour’s fiscal rules at the budget on 30 October by borrowing billions for infrastructure investment.

Following weeks of speculation, the chancellor will reveal her plans to change Britain’s debt rules at the International Monetary Fund’s (IMF) annual meeting in Washington on 24 October.

There’s a few ways she could do this – here’s everything you need to know:

The sale of disposable vapes will be banned in England and Wales from next year.

Under legislation laid out by the Labour government in Parliament, it will be illegal for retailers to sell the devices from 1 June 2025.

It has been reported that Rachel Reeves is also considering raising the tax further as part of her Budget to be unveiled at the end of the month.

Labour has already outlined its ambition to reduce the amount of young people smoking or vaping, bringing in new rules as part of the Tobacco and Vapes Bill.