Summary
Overview
Rachel Reeves delivered Labour's second major budget, implementing £66 billion in tax rises compared to the £8.5 billion promised in their manifesto. The budget included freezing income tax thresholds until 2031, lifting the two-child benefit cap, and introducing new taxes on high-value properties. Despite positioning growth as their primary mission, the OBR downgraded growth forecasts for most years ahead while welfare spending projections increased by £16 billion. The budget shores up Labour's internal party support but raises questions about whether this signals a fundamental shift toward bigger government and whether more tax rises might follow.
Budget Chaos and Broken Promises
The lead-up to this budget was marked by unprecedented chaos, with leaks, policy U-turns, and the OBR accidentally releasing critical data 40 minutes before the Chancellor's speech. Rachel Reeves had promised last year that they wouldn't need to do 'a budget like this ever again,' yet here they are with another massive tax-raising budget. The gap between manifesto promises and reality has become stark, with tax increases reaching £66 billion versus the promised £8.5 billion.
- Rachel Reeves promised last year: 'I'm not coming back with more borrowing or more taxes' and 'we won't have to do a budget like this ever again'
- Labour has raised £66 billion in taxes across two budgets, far exceeding the £8.5 billion promised in their manifesto
- The OBR released critical budget data 40 minutes before the Chancellor's speech, representing a serious breach of budget process
- The chaotic lead-up included leaks, kite-flying, and confusion over whether income tax would be raised
" I'm really clear, I'm not coming back with more borrowing or more taxes. And as a result we won't have to do a budget like this ever again. "
" The inability to run a whelk stall, as Ken Clarke said to you last week, was on evidence today. "
Historic Tax Burden on Middle-Income Workers
This budget represents one of the most significant tax-raising parliaments since 1970, with the tax burden rising to 38% of GDP by 2030-31. The extension of income tax threshold freezes until 2031 means fiscal drag will transform Britain's tax base, with nearly 20% of people paying the higher rate compared to just 8-9% in 2015. This disproportionately affects middle-income workers who will find themselves in higher tax brackets for the first time.
- Tax burden will reach an all-time high of 38% of GDP in 2030-31
- More net tax increases announced in this parliament than any since 1970, despite being less than two years old
- Income tax thresholds frozen until April 2031, extending Tory freeze by one year
- 780,000 more people will become basic rate taxpayers and 920,000 more will pay higher rate
- Higher rate tax will be paid by nearly 20% of people versus 8-9% in 2015 and just 3% when first introduced in the late 1980s
" If there were an election tomorrow, there would have been more net tax increases announced in this parliament, which is not even two years old, than any other parliament since at least 1970. "
" The higher rate of tax used to be a rate of tax for really quite rich people. It will now be being paid by people on pretty relatively modest incomes. That is a transformation in our tax system, which is here to stay. "
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