Tough Brits warned to prepare for ‘the biggest heist in modern political history’: Rachel Reeves to reveal £35bn tax grab as Labor’s first budget in a generation targets NI, fuel duty, school fees and even bus fares

On By Karl

Rachel Reeves will today announce the £35bn tax bombshell critics have called ‘the biggest rip-off in modern political history’.

In one of the most important budgets for years, the Chancellor will put Britain on a path of high taxes, high spending and high debt in a gamble designed to kick-start growth.

In a statement last night, Ms Reeves said: ‘The only way to increase economic growth is to invest, invest, invest.

‘There are no shortcuts. ‘In order to realize this investment, we must re-establish economic stability.’

Ms Reeves, who will be the first woman in history to deliver a Budget, will confirm the relaxation of the government’s fiscal rules, which will allow her to borrow up to £50bn to spend on infrastructure projects and growth sectors such as green energy.

Tough Brits warned to prepare for ‘the biggest heist in modern political history’: Rachel Reeves to reveal £35bn tax grab as Labor’s first budget in a generation targets NI, fuel duty, school fees and even bus fares

Rachel Reeves is set to put Britain on a path of high taxes, high spending and high debt in tomorrow’s Budget

Ms Reeves prepares for Wednesday's Autumn Budget in her office at HM Treasury

Ms Reeves prepares for Wednesday’s Autumn Budget in her office at HM Treasury

The Chancellor is set to focus tax increases on employers, including a £20 billion cut to National Insurance contributions (file photo)

The Chancellor is set to focus tax increases on employers, including a £20 billion cut to National Insurance contributions (file photo)

But ministers will be watching with concern the reaction in the City, where yesterday the government’s borrowing rate rose to the highest level since the election, leading to fears that mortgage interest rates will rise.

The Chancellor is also bracing for a backlash from the business community over his decision to focus tax increases on employers; This included a £20 billion hit to National Insurance, which critics warned would cost jobs and reduce wages.

The CBI warned that the tax increase, combined with a large increase in the minimum wage, would ‘make it increasingly difficult for firms to find the headroom to invest in the technology and innovation needed to boost productivity and deliver sustainable increases in wages’.

Investors are also expected to be affected by the increase in capital gains tax. And despite Labour’s promise to protect ‘working people’, many ordinary workers will also be hit by the decision to extend the six-year freeze on tax thresholds for at least another year.

Conservative leadership contender Robert Jenrick said: ‘This Budget completes the greatest heist in modern political history. Labor came to power by lying to the British public about its plans to raise taxes.

‘Working people will suffer and our economic recovery will take a huge hit. ‘No wonder the public doesn’t trust politicians.’

Rishi Sunak, who will respond to the Budget on Wednesday as Conservative leader, said the expected rise in NI would be a clear breach of Labour’s manifesto, which promised not to increase income tax, national insurance or VAT.

Conservative leadership contender Robert Jenrick says Labor's first budget 'completes the biggest rip-off in modern political history'

Conservative leadership contender Robert Jenrick says Labor’s first budget ‘completes the biggest rip-off in modern political history’

Rishi Sunak will respond to the Budget on Wednesday in one of his final acts as Conservative Party leader

Rishi Sunak will respond to the Budget on Wednesday in one of his final acts as Conservative Party leader

Jeremy Hunt made a last-ditch attempt to block a 'highly political' file during his time as Chancellor alongside the Budget

Jeremy Hunt made a last-ditch attempt to block a ‘highly political’ file during his time as Chancellor alongside the Budget

Minimum wage increase will mean ‘fewer jobs overall’

Chancellor Rachel Reeves will today push ahead with an inflation-busting increase in the minimum wage despite warnings it would cost jobs.

It introduced a 6.7 per cent increase in the National Living Wage, reaching £12.21 per hour (almost four times the current 1.7 per cent inflation). Ms Reeves also agreed to a record 16.3 per cent rate for 18 to 20-year-olds, bringing the rate to £10 an hour.

Last night he described the move as a ‘major step’ towards Labour’s manifesto promise to deliver a ‘real living wage for working people’.

But it has been warned that the buffer increase in employers’ national insurance, which comes on top of the expected budget increase, could cost jobs.

Baroness Stroud, chair of the Low Pay Commission, which advises ministers on the minimum wage, said there were growing signs that firms were struggling to cope with a series of rapid increases: ‘The government has been clear about its targets for the national minimum wage. its importance in supporting workers’ living standards. At the same time, employers have had to deal with adult rates increasing by over 20 per cent in two years.’

Robert Colvile, of the Center for Policy Studies think tank, said: ‘Given the state of the employment market, there is a real risk that this will lead to less employment overall.’

The former Prime Minister pointed out that the Chancellor had previously condemned the idea of ​​increasing employers’ NI as a ‘business tax’.

He said: ‘Rachel Reeves has promised her plans are fully funded and she won’t change her debt target because that would be ‘distorting the figures’.

‘We already know these promises are completely worthless because he will change his financial rules so he can go on a borrowing spree.

‘It would be a complete betrayal if he compounded this by breaking his promise to the British people not to increase taxes on workers by increasing National Insurance.’

Yesterday Ms Reeves appeared to drop her election promise to protect ‘working people’ from higher taxes, saying only that she was ‘determined to ensure no worker sees higher taxes on their payroll after the Budget’.

Today he will try to lay the blame for the Budget pain at the door of the Conservatives.

He will accuse Jeremy Hunt of leaving a £22bn ‘black hole’ in the public finances.

And he will say that the spending plans left behind by the last government amount to a ‘fiscal fiction’ that will lead to a return to austerity.

Instead it is expected to put more money into the NHS and other public services.

He said last night the Budget could put Britain on the path to ‘tremendous’ rewards such as higher growth and better public services.

He said the measures would ‘open a new chapter of low growth and mark the beginning of a new chapter in making Britain better off’. ‘This will mean more money in people’s pockets, an NHS that’s there when they need it, and businesses that create wealth and opportunity for everyone.’

But the cabinet acknowledged it had to make ‘difficult choices’ on taxes, spending and welfare, briefing yesterday outlining its budget plans.

Chancellor to highlight £22bn 'black hole' in public finances in autumn budget speech on Wednesday

Chancellor to highlight £22bn ‘black hole’ in public finances in autumn budget speech on Wednesday

Some of the announcements expected in the budget:

  • employers National Insurance will be increased by up to 2 per cent The threshold at which NI is paid will also be cut as part of a package worth around £20bn.
  • Income tax. The six-year freeze on thresholds, which is due to expire in 2028, will be extended for another year, pushing hundreds of thousands of people into higher tax bands.
  • Private schools. From January, the government will remove VAT exemptions and end business rates relief for private schools.
  • Bus fares. The £2 fare cap on a single journey will be increased to £3 and the scheme will be extended until the end of 2025.
  • Minimum wage. The national living wage will rise 6.7 per cent to £12.21 per hour, while under-21s will receive £10 per hour, a 16.3 per cent increase.
  • Financial rules. Ms Reeves will change the Treasury’s definition of debt to allow the government to borrow up to £50 billion extra for infrastructure investment, but is expected to spend only half that today to limit the risk of market reaction.
  • Stamp duty. Ms Reeves will end the temporary deduction, meaning the tax-free threshold will be halved from £250,000 to £125,000.
  • Fuel duty. The industry expects Ms Reeves to end the temporary 5p per liter cut in fuel duty introduced after Russia invaded Ukraine. But it is thought he has backed away from a bigger increase and may even freeze it for the rest of parliament.
  • Inheritance tax. The Chancellor will tighten relief for farmland and extend the amount of time a person must survive giving money as a gift tax-free from seven to 10 years.
  • Capital gains. The rate paid on the sale of assets such as shares will be increased, but Ms Reeves is expected to avoid further increases for second home owners.
  • NHS. Billions of pounds in funding, including £1.5 billion for new surgery centers and scanners to shorten waiting lists.
  • Energy. The Chancellor will increase the windfall tax on big energy companies, despite warnings that the collapse in oil prices means it will do nothing.
  • Education. Ms Reeves will approve £1.4 billion to rebuild dilapidated schools, as well as cash to fund new breakfast clubs.
  • Housing. Discounts for those looking to buy their own council home will be cut by up to two-thirds as part of a plan to increase the social housing stock.
  • Smoke. The Chancellor is expected to increase duty on both e-cigarettes and traditional tobacco products to discourage their use.