Budget 2024: what’s likely to be in it and what’s not?

From briefings and speculations about what will be included in the Chancellor’s budget on Wednesday, and especially about the scale of tax increases.

The biggest expected driver of the revenue increase, which is expected to generate as much as £20 billion for public services, is a rise in employers’ National Insurance contributions.

Government sources have given strong signals about the chancellor’s thinking, raising questions about whether this breaks Labour’s manifesto pledge not to increase the three main taxes – income tax, national insurance and VAT for “working people”.

Increases in capital gains tax and inheritance tax have been touted as a way for a Labor government to find money to balance the books and repair public services.

The content of the budget will only be official when Rachel Reeves will publish them on Wednesday, but these are some measures that Sky News expects – and does not expect – to include.

No increases in income tax, national insurance or VAT

Labor has ruled out a rise in income tax, national insurance and VAT in its election manifesto, promising to protect “working people” – although who they define as a “working person” has come into question lately.

The chancellor is expected to do the same extension of the freeze on income tax thresholds by two years to 2030, after the previous Conservative government froze them until 2028.

Expected increase in employers’ social security contributions

The amount that employers pay into National Insurance will increase by as much as two percentage pointsand the money will be used in part to pump £10 billion into reducing NHS waiting lists.

A government source told Sky News: “There is broad agreement that the NHS needs more money.

“That means reaching out to companies for help.

“The choice is investment or failure. “She (Rachel Reeves) chooses not to ask working people to pay the price for their (Conservatives’) failures.”

Apartments

The government has confirmed that there will be a big increase in the number of affordable housing units in the upcoming budget.

It says the £500 million new funding will help build up to 5,000 social homes and increase total investment in housing supply to £5 billion under the Government’s Affordable Homes Scheme.

£1.4 billion for failing schools

The chancellor does promised that her budget would include £1.4 billion to rebuild failing schools.

She said children “should not suffer” from a reduction in the UK’s public budget, while economists said the funding would essentially ensure existing plans continued, rather than paying for many new initiatives. Teachers argued that much more money was needed.

The Treasury said the £1.4 billion would “ensure delivery” of the schools recovery program announced in 2020 under then Prime Minister Boris Johnson.

Funding for nurseries, breakfast clubs and childcare

The Treasury also confirmed that £1.8 billion would go towards expanding government-funded childcare, with a further £15 million going to school nurseries.

The Treasury said the first stage of the plan would cover the costs of creating 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 announcing at September’s Labor conference that a £7m trial would start in as many as 750 from April schools.

Abolition of VAT for private schools

Labor has long been clear about its plans to scrap VAT exemption and business rates relief for private schools 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 on October 30 after the budget is published.

This is just two months before the policy comes into effect on January 1, 2025, and it is likely to include details on whether schools will be forced to increase fees.

It is now expected that military families, some of whom send their children to private boarding schools because they can be sent abroad quickly, will be exempt from paying the increased fees.

Changes to the £2 maximum bus fare

From 1 January 2023, bus fares on over 4,600 routes in England are £2.

Hundreds of operators outside London took part in the programme, which cost around £500 million.

Former Transportation Secretary Mark Harper, when introducing the program in 2023, said it was intended to help passengers afford bus trips for both their own sake and the environment.

However, the program, which is currently scheduled to run until at least December 31, is set to be changed because it is reported to be of no economic benefit. It is unclear whether the cap will be lifted or removed completely.

Read more:
Reeves has left herself few political levers to extract money
Starmer denies waging a “war on middle Britain” with the budget

Billions will go to the NHS

The government will provide up to £10 billion for the NHS, mainly to help it deal with rising waiting lists after Covid-19, which now stand at a record 7.6 million, and to deliver on its promise of another 40,000 hospital visits a week.

Health Secretary Wes Streeting said last week that it was agreed a funding plan for the NHS with the Chancellor – but noted that the funds would not actually be available for another six months.

“Investments in the budget that will appear in the new financial year in April, so spring will come,” he said.

Labor faces ‘difficult and big choices’warned Streeting, stating that the government “cannot wrap up 14 years in one budget.”

Extension of care allowance

Ms Reeves is expected to raise the limit on how much people can earn before becoming ineligible for Carers’ Benefit from £151 a week to £181.

This would mean tens of thousands of carers who are not currently eligible for the benefit would receive an extra £81.90 a week under the scheme.

The budget discussion will take place on Wednesday, October 30, at 12:30.