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Autumn Budget 2024 speech as delivered by Chancellor Rachel Reeves.

Madam Deputy Speaker…

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This government was given a mandate. 

To restore stability to our economy… 

… and to begin a decade of national renewal. 

To fix the foundations… 

… and deliver change. 

Through responsible leadership in the national interest.  

That is our task.  

And I know that we can achieve it. 

My belief in Britain burns brighter than ever.  

And the prize on offer is immense.  

As my Right Honourable Friend the Prime Minister said on Monday – change must be felt. 

More pounds in people’s pockets.  

An NHS that is there when you need it.  

An economy that is growing, creating wealth and opportunity for all…  

… because that is the only way to improve living standards.   

And the only way to drive economic growth… 

… is to invest, invest, invest.  

There are no shortcuts. 

And to deliver that investment… 

… we must restore economic stability…

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INHERITANCE

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… it is the first Budget in our country’s history to be delivered by a woman.  

I am deeply proud to be Britain’s first ever female Chancellor of the Exchequer.  

To girls and young women everywhere, I say:  

Let there be no ceiling on your ambition, your hopes and your dreams.  

And along with the pride that I feel standing here today… 

… there is also a responsibility… 

… to pass on a fairer society and a stronger economy to the next  

generation of women.

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A black hole in the public finances… 

Public services on their knees…. 

A decade of low growth. 

And the worst parliament on record for living standards. 

Let me begin with the public finances. 

In July, I exposed a £22bn black hole

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The Treasury’s reserve, set aside for genuine emergencies… 

… spent three times over… 

… just three months into the financial year.  

Today, on top of the detailed document that I have provided to the House in July… 

… the government is publishing a line by line breakdown of the £22bn black hole that we inherited… 

It shows hundreds of unfunded pressures on the public finances… 

… this year, and into the future too.  

The Office for Budget Responsibility have published their own review of the circumstances around the Spring Budget forecast.  

They say that the previous government – and I quote - “did not provide the OBR with all the [available] information to them”… 

… and - had they known about these “undisclosed spending pressures that have since come to light”… 

… then their Spring Budget forecast for spending would have been, and I quote again: “materially different”.  

Let me be clear: that means any comparison between today’s forecast and the OBR’s March forecast is false… 

… because the party opposite hid the reality of their public spending plans. 

Yet at the very same budget… 

… they made another ten billion pounds worth of cuts to National Insurance.

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That’s why today, I can confirm that we will implement in full… 

… the 10 recommendations from the independent Office for Budget Responsibility’s review. 

But, the country has inherited not just broken public finances… 

… but broken public services too. 

The British people can see and feel that in their everyday lives. 

NHS waiting lists at record levels. 

Children in portacabins as school roofs crumble. 

Trains that do not arrive. 

Rivers filled with polluted waste.  

Prisons overflowing. 

Crimes which are not investigated… 

… and criminals who are not punished.  

That is the country’s inheritance

Since 2021, there had been no detailed plans for departmental spending set out beyond this year.  

And [redacted political content] plans relied on a baseline for spending this year which we now know was wrong… 

… because it did not take into account the £22bn black hole.  

The previous government also failed to budget for costs which they knew would materialise.  

That includes funding for vital compensation schemes…  

… for victims of two terrible injustices…

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… the infected blood scandal… 

… and the Post Office Horizon scandal.  

The Leader of the Opposition rightly made an unequivocal apology for the injustice of the infected blood scandal on behalf of the British state… 

… but he did not budget for the costs of compensation.  

Today, for the very first time, we will provide specific funding to compensate those infected and those affected, in full… 

… with £11.8bn in this budget. 

And I am also today setting aside £1.8bn to compensate victims of the Post Office Horizon scandal… 

… redress that is long overdue for the pain and injustice that they have suffered.

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… and we will restore stability to our country again. 

The scale and seriousness of the situation that we have inherited cannot be underestimated. 

Together, the hole in our public finances this year, which recurs every year… 

… the compensation schemes that they did not fund… 

… and their failure to assess the scale of the challenges facing our public services… 

… means this budget raises taxes by £40bn. 

Any Chancellor standing here today would have to face this reality. 

And any responsible Chancellor would take action. 

That is why today, I am restoring stability to our public finances… 

… and rebuilding our public services.  

FISCAL RULES / OBR FORECASTS 

Economy forecast/growth 

As a former economist at the Bank of England, I know what it means to respect our economic institutions.  

I want to put on record my thanks to the Governor of the Bank, Andrew Bailey…  

… and to the independent Monetary Policy Committee. 

Today, I can confirm that we will maintain the MPC’s target of two per cent inflation, as measured by the 12-month increase in the Consumer Prices Index. 

I want to thank James Bowler, the Permanent Secretary to the Treasury, and my team of officials. 

Madam Deputy Speaker, I would also like to thank my predecessors as Chancellor of the Exchequer… 

… for their wise counsel as I have prepared for this Budget.

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Finally, I want to thank Richard Hughes and his team at the Office for Budget Responsibility for their work in preparing today’s economic and fiscal outlook. 

Let me now take the House through that forecast. 

The cost of living crisis under the last government stretched household finances to their limit, with inflation hitting a peak of above 11%.  

Today, the OBR say that CPI inflation will average 2.5% this year, 2.6% in 2025, then 2.3% in 2026, 2.1% in 2027, 2.1% in 2028 and 2.0% in 2029.  

Next, I move on to economic growth.  

Today’s budget marks an end to short-termism.  

So I am pleased, that for the first time, the OBR have published not only five year growth forecasts… 

… but a detailed assessment of the growth impacts of our policies over the next decade, too… 

… and the new Charter for Budget Responsibility, which I am publishing today, confirms that this will become a permanent feature of our framework. 

The OBR forecast that real GDP growth will be 1.1% in 2024, 2.0% in 2025, 1.8% in 2026, 1.5% in 2027, 1.5% in 2028 and 1.6% in 2029. 

And the OBR are clear: this Budget will permanently increase the supply capacity of the economy…

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… boosting long-term growth. 

Every Budget I deliver will be focused on our mission to grow the economy. 

And underpinning that mission are the seven key pillars of our growth strategy… 

… developed and delivered alongside business…  

… all driven forward by our Financial Secretary to the Treasury.   

First, and most important, is to restore economic stability. That is my focus today. 

Second, increasing investment and building new infrastructure is vital for productivity, so we are catalysing £70bn of investment through our National Wealth Fund… 

… and we are transforming our planning rules to get Britain building again. 

Third, to ensure that all parts of the UK can realise their potential… 

… we are working with the devolved governments… 

… and partnering with our Mayors to develop local growth plans.  

Fourth, to improve employment prospects and skills we are creating Skills England, delivering our plans to Make Work Pay and tackling economic inactivity.  

Fifth, we are launching our long-term modern industrial strategy and expanding opportunities for our small and medium sized businesses to grow. 

Sixth, to drive innovation we are protecting record funding for research and development to harness the full potential of the UK’s science base.  

And finally, to maximise the growth benefits of our clean energy mission, we have confirmed key investments such as Carbon Capture and Storage to create jobs in our industrial heartlands. 

Our approach is already having an impact. 

Just two weeks ago – we delivered an International Investment Summit which saw businesses commit £63.5bn of investment into this country… 

… creating nearly 40,000 jobs across the United Kingdom.

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Economic growth will be our mission for the duration of this parliament.  

Stability rule 

Madam Deputy Speaker, in our manifesto, we set out the fiscal rules that would guide this government. 

I am confirming those today… 

Our stability rule… 

And our investment rule… 

The “stability rule” means that we will bring the current budget into balance… 

… so that we do not borrow to fund day to day spending. 

We will meet this rule in 2029-30, until that becomes the third year of the forecast.  

From then on, we will balance the current budget in the third year of every budget, held annually each autumn. 

That will provide a tougher constraint on day to day spending… 

… so difficult decisions cannot be constantly delayed or deferred.  

The OBR say that the current budget will be in deficit by £26.2bn in 2025-26 and £5.2bn in 2026-27… 

… before moving into surplus of £10.9bn in 2027-28, £9.3bn in 2028-29 and £9.9bn in 2029-30… 

… meeting our stability rule… 

… two years early.  

Monthly public sector finances data shows that government borrowing in the first six months of this year… 

… was already running significantly higher than the OBR’s March forecast. 

And so the OBR confirmed today, that borrowing in this financial year is now £127bn…

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The increase in the net cash requirement in 24-25 is lower than the increase in borrowing, at £22.3bn higher than the spring forecast.  

Because of the action that we are taking… 

… borrowing falls from 4.5% of GDP this year to 2.1% of GDP by the end of the forecast. 

Public sector net borrowing will be £105.6bn in 2025-26, £88.5bn in 2026-27, £72.2bn in 2027-28, £71.9bn in 2028-29 and £70.6bn in 2029-2930. 

FIXING THE FOUNDATIONS 

Spending  

Madam Deputy Speaker, before I come to tax… 

… it is vital that we are driving efficiency and reducing wasteful spending. 

In July, to begin delivering, and dealing with our inheritance… 

… I made £5.5bn of savings this year.  

Today we are setting a 2% productivity, efficiency and savings target for all departments to meet next year… 

… by using technology more effectively and joining up services across government 

As set out in our manifesto, I will shortly be appointing our Covid Corruption Commissioner, they will lead our work to uncover those companies that used a national emergency to line their own pockets. 

Because that money belongs in our public services. And taxpayers want that money back.  

And I can confirm today that David Goldstone has been appointed as the Chair of the new Office for Value for Money…  

… to help us realise the benefits from every pound of public spending. 

Welfare 

Today, I am also taking three steps to ensure that welfare spending is more sustainable.  

First, we inherited [redacted political content] plans to reform the Work Capability Assessment.  

We will deliver those savings…  

…as part of our fundamental reforms to the health and disability benefits system that my Right Honourable Friend the Work and Pensions Secretary will bring forward. 

Second, I can today announce a crackdown on fraud in our welfare system… 

… often the work of criminal gangs.  

We will expand DWP’s counter-fraud teams.. 

… using innovative new methods to prevent illegal activity…  

… and provide new legal powers to crackdown on fraudsters… 

… including direct access to bank accounts to recover debt. 

This package saves £4.3bn a year by the end of the forecast. 

Third, the government will shortly be publishing the “Get Britain Working” white paper…  

… tackling the root causes of inactivity with an integrated approach across health, education and welfare.  

… and we will provide £240m for 16 trailblazer projects… 

… targeted at those who are economically inactive and most at risk of being out of education, employment or training… 

… to get people into work and reduce the benefits bill.  

Tax avoidance 

Before a government could consider any change to a tax rate or threshold… 

… it must ensure that people pay what they already owe. 

So we will invest to modernise HMRC’s systems using the very best technology… 

… and recruit additional HMRC compliance and debt staff. 

We will clamp down on those umbrella companies who exploit workers… 

… increase the interest rate on unpaid tax debt to ensure that people pay on time… 

… and go after promoters of tax avoidance schemes. 

These measures to reduce the tax gap raise £6.5bn by the end of the forecast… 

… and I want to thank the Exchequer Secretary for his outstanding work on this agenda. 

PROTECTING WORKING PEOPLE 

Madam Deputy Speaker, I know that for working people up and down our country… 

… family finances are stretched… 

… and pay checks don’t go as far as they once did. 

So today, I am taking steps to support people with the cost of living. 

Cost of living

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As promised in our manifesto, we asked the Low Pay Commission to take account of the cost of living for the first time.  

I can confirm that we will accept the Low Pay Commission recommendation to increase the National Living Wage by 6.7% to £12.21 an hour… 

… worth up to £1,400 a year for a full-time worker. 

And for the first time, we will move towards a single adult rate…  

… phased in over time…  

… by initially increasing the National Minimum Wage for 18-20 year olds by 16.3% as recommended by the Low Pay Commission… 

… taking it to £10 an hour.

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Second, I have heard representations from colleagues across this house about the Carer’s Allowance… 

… and the impact of the current policy on carers looking to increase the hours they work… 

… including from the Honourable member for Shipley, the Honourable member for Scarborough and Whitby and the Rt Hon Member for Kingston and Surbiton, too. 

Carer’s allowance currently provides up to £81.90 per week to help those with additional caring responsibilities.  

Today, I can confirm that we are increasing the weekly earnings limit to the equivalent of 16 hours at the National Living Wage per week… 

… the largest increase in Carer’s Allowance since it was introduced in 1976.  

That means a carer can now earn over £10,000 a year while receiving Carer’s Allowance… 

… allowing them to increase their hours where they want to… 

… and keep more of their money. 

I am also concerned about the cliff-edge in the current system and the issue of overpayments. 

My Right Honourable Friend the Work and Pensions Secretary has announced an independent review to look at the issue of overpayments, and we will work across this house to develop the right solutions. 

Third, we will provide £1bn from next year to extend the Household Support Fund and Discretionary Housing Payments, to help those facing financial hardship with the cost of essentials.  

Fourth, having heard representations from the Joseph Rowntree Foundation, Trussell and others… 

… to reduce the level of debt repayments that can be taken from a household’s Universal Credit payment each month… 

… by reducing it from 25% to 15% of their standard allowance. 

This means that 1.2 million of the poorest households will keep more of their award each month… 

… lifting children out of poverty…  

… and those who benefit will gain an average of £420 a year. 

Madam Deputy Speaker, our Plan to Make Work Pay will also protect working people.

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It is right that we protect those who have worked their whole lives.  

In our manifesto, we promised to transfer the Investment Reserve Fund in the Mineworkers’ Pension Scheme to members… 

… and I have listened closely to my Honourable Friends for Easington, Doncaster Central, Blaenau Gwent, and Ayr, Carrick and Cumnock on this issue. 

Today we are keeping our promise…  

… so that working people who powered our country receive the fair pension that they are owed. 

Our manifesto committed to the Triple Lock… 

… meaning spending on the State Pension is forecast to rise by over £31bn by 2029-30… 

… to ensure that our pensioners are protected in their retirement.  

This commitment means that while working age benefits will be uprated in line with CPI, at 1.7%… 

… the basic and new State Pension… 

… will be uprated by 4.1% in 2025-26. 

This means that over 12 million pensioners will gain up to £470 next year… 

… up to £275 more than if uprated by inflation.  

The Pension Credit Standard Minimum Guarantee will also rise by 4.1%…  

… from around £11,400 per year to around £11,850 for a single pensioner.  

Fuel duty 

While I have sought to protect working people with measures to reduce the cost of living… 

… I have had to take some very difficult decisions on tax. 

I want to set out my approach to fuel duty.  

Baked into the numbers that I inherited from the previous government… 

… is an assumption that fuel duty will rise by RPI next year… 

… and that the temporary 5p cut will be reversed.  

To retain the 5p cut… 

… and to freeze fuel duty again… 

… would cost over £3bn next year.  

At a time when the fiscal position is so difficult…  

… I have to be frank with the House that this is a substantial commitment to make. 

I have concluded… 

… that in these difficult circumstances… 

… while the cost of living remains high… 

… and with a backdrop of global uncertainty… 

… increasing fuel duty next year… 

… would be the wrong choice for working people. 

It would mean fuel duty rising by 7p per litre. 

So, I have today decided to freeze fuel duty next year… 

… and I will maintain the existing 5p cut for another year, too. 

There will be no higher taxes at the petrol pumps next year.

Madam Deputy Speaker, the last government made cuts of £20bn to employees’ and self-employed national insurance in their final two budgets.

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Because we now know they were based on a forecast which the OBR say would have been “materially different”… 

… had they known the true extent of the last government’s cover-up.   

Since July, I have been urged on multiple occasions to reconsider these cuts.  

To increase the taxes that working people pay and see in their payslips. 

But I have made an important choice today: 

To keep every single commitment that we made on tax in our manifesto.  

So I say to working people: 

I will not increase your National Insurance… 

…I will not increase your VAT… 

…And I will not increase your income tax. 

Working people will not see higher taxes in their payslips as a result of the choices I make today. 

That is a promise made – and a promise fulfilled. 

TAX 

But any responsible Chancellor would need to take difficult decisions today. 

To raise the revenues required to fund our public services. 

And to restore economic stability.  

So in today’s Budget, I am announcing an increase in Employers’ National Insurance Contributions.  

We will increase the rate of Employers’ National Insurance by 1.2 percentage points, to 15%, from April 2025.  

And we will reduce the Secondary Threshold – the level at which employers start paying national insurance on each employee’s salary – from £9,100 per year to £5,000.  

This will raise £25bn per year by the end of the forecast period.  

I know that this is a difficult choice. 

I do not take this decision lightly.  

We are asking business to contribute more… 

… and I know that there will be impacts of this measure felt beyond businesses, too… 

… as the OBR have set out today. 

But in the circumstances that I have inherited, it is the right choice to make.  

Successful businesses depend on successful schools. 

Healthy businesses depend on a healthy NHS.  

And a strong economy depends on strong public finances.

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That is the choice our country faces too.  

As I make this choice, I know it is particularly important to protect our smallest companies.  

So having heard representations from the Federation of Small Businesses and others… 

… I am today increasing the Employment Allowance from £5,000 to £10,500. 

This means 865,000 employers won’t pay any National Insurance at all next year… 

… and over 1 million will pay the same or less than they did previously. 

This will allow a small business to employ the equivalent of 4 full time workers on the National Living Wage… 

… without paying any National Insurance on their wages. 

Madam Deputy Speaker, let me come now to capital gains tax. 

We need to drive growth, promote entrepreneurship, and support wealth creation… 

… while raising the revenue required to fund our public services… 

… and restore our public finances.  

Today, we will increase the lower rate of Capital Gains Tax from 10% to 18%, and the Higher Rate from 20% to 24%… 

… while maintaining the rates of capital gains tax on residential property at 18% and 24%, too.  

This means the UK will still have the lowest Capital Gains Tax rate of any European G7 economy. 

Alongside these changes to the headline rates of Capital Gains Tax… 

… we are maintaining the lifetime limit for Business Asset Disposal Relief at £1m… 

… to encourage entrepreneurs to invest in their businesses.   

Business Asset Disposal Relief will remain at 10% this year… 

… before rising to 14% in April 2025… 

… and 18% from 2026-27… 

… maintaining a significant gap compared to the higher rate of Capital Gains Tax.  

Together, the OBR say these measures will raise £2.5bn by the end of the forecast. 

In a sign of this government’s commitment to supporting growth and entrepreneurship… 

…we have already extended the Enterprise Investment Scheme and Venture Capital Trust schemes to 2035… 

… and we will continue to work with leading entrepreneurs and venture capital firms… 

… to ensure our policies support a positive environment for entrepreneurship in the UK. 

Next, inheritance tax. 

Only 6% of estates will pay inheritance tax this year. 

I understand the strongly held desire to pass down savings to children and grandchildren. 

So I am taking a balanced approach in my package today. 

First, the previous government froze inheritance tax thresholds until 2028. I will extend that freeze for a further two years, until 2030. 

That means the first £325,000 of any estate can be inherited tax-free… 

… rising to £500,000 if the estate includes a residence passed to direct descendants…. 

… and £1m when a tax free allowance is passed to a surviving spouse or civil partner. 

Second, we will close the loophole created by the previous government… 

… made even bigger when the Lifetime Allowance was abolished… 

… by bringing inherited pensions into inheritance tax from April 2027. 

Finally, we will reform Agricultural Property Relief and Business Property Relief.  

From April 2026, the first £1m of combined business and agricultural assets will continue to attract no inheritance tax at all… 

… but for assets over £1m, inheritance tax will apply with 50% relief, at an effective rate of 20%. 

This will ensure we continue to protect small family farms… 

… and three-quarters of claims will be unaffected by these changes. 

I can also announce that we will apply a 50% relief, in all circumstances, on inheritance tax for shares on the Alternative Investment Market (AIM) and other similar markets… 

… setting the effective rate of tax at 20%. 

Taken together, these measures raise over £2bn in the final year of the forecast. 

Next, I can confirm that the government will renew the Tobacco Duty escalator for the remainder of this Parliament at RPI+2%… 

… increase duty by a further 10% on hand-rolling tobacco this year… 

… introduce a flat rate duty on all vaping liquid from October 2026… 

… alongside an additional one off- increase in tobacco duty to maintain the incentive to give up smoking. 

And we will increase the Soft Drinks Industry Levy to account for inflation since it was introduced… 

…  as well as increasing the duty in line with CPI each year going forward. 

These measures will raise nearly £1bn per year by the end of the forecast period. 

Madame Deputy Speaker, we want to support the take-up of electric vehicles. 

So I will maintain incentives for electric vehicles in Company Car Tax from 2028… 

… and increase the differential between fully electric and other vehicles in the first year rates of Vehicle Excise Duty from April 2025. 

These measures will raise around £400m by the end of the forecast period. 

Madam Deputy Speaker let me update the House on our plans for Air Passenger Duty…

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Air Passenger Duty has not kept up with inflation in recent years… 

… so we are introducing an adjustment… 

… meaning an increase of no more than £2 for an economy class short-haul flight.  

But I am taking a different approach when it comes to private jets…  

… increasing the rate of Air Passenger Duty by a further 50%.

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These measures will raise over £700m by the end of the forecast period. 

Madam Deputy Speaker, let me turn now to our high street businesses.  

I know that for them, a major source of concern is business rates.  

From 2026-27, we intend to introduce two permanently lower tax rates for retail, hospitality and leisure properties which make up the backbone of high streets across the country… 

… and it is our intention that is paid for by a higher multiplier for the most valuable properties.

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So I will today provide 40% relief on business rates for the retail, hospitality and leisure industry in 2025-26… 

… up to a cap of £110,000 per business. 

Alongside this, the small business tax multiplier will be frozen next year.  

Next, I can confirm that alcohol duty rates on non-draught products will increase in line with RPI from February next year… 

… but nearly two-thirds of alcoholic drinks sold in pubs are served on draught. 

So today, instead of uprating these products in line with inflation… 

… I am cutting draught duty by 1.7%… 

… which means a penny off a pint in the pub. 

Alongside the changes I am making today, I am publishing a Corporate Tax Roadmap.. 

… providing the business certainty called for by the CBI, British Chambers of Commerce and the Institute for Directors. 

This confirms our commitment to cap the rate of Corporation Tax at 25% - the lowest in the G7 –  for the duration of this parliament…. 

… while maintaining full expensing and the £1 million Annual Investment Allowance… 

…and keeping the current rates of research and development reliefs, to drive innovation. 

Manifesto 

Madam Deputy Speaker, in our manifesto we made a number of commitments to raise funding for our public services.  

First, I have always said that if you make Britain your home, you should pay your tax here. 

So today, I can confirm… 

… we will abolish the non-dom tax regime… 

… and remove the outdated concept of domicile from the tax system from April 2025. 

We will introduce a new, residence based scheme… 

… with internationally competitive arrangements for those coming to the UK on a temporary basis… 

… while closing the loopholes in the scheme designed by the party opposite. 

To further encourage investment into t