The Institute for Fiscal Studies (IFS) has told Rachel Reeves she must “step back” and stop “disincentivise” growth, as the prime minister defends the chancellor’s tax hikes in her Budget.
The Institute for Fiscal Studies (IFS) accused Rachel Reeves of breaching Labour’s manifesto after she hiked taxes by £26bn in her Budget, taking the tax burden to an all-time high.
IFS director Helen Miller said: “I think a lot of what we need to do is step back.”
The IFS has said income tax threshold freezes, alongside Ms Reeves’ decision to cap pension salary sacrifice schemes, means National Insurance will increase, amounting to a “breach of the manifesto”.
Speaking on Thursday morning, Ms Reeves refused to admit the Budget meant Labour has broken its promise not to raise taxes on working people - but acknowledged it would mean working people had to “contribute a bit more”.
Sir Keir Starmer has defended the chancellor’s Budget, but accepted he had asked “everybody to make a contribution”.
The tax hikes come in response to downgraded economic forecasts but also increased welfare spending because of the abolition of the two-child benefit cap and the Labour revolt over attempts to curb the benefits bill.
Millions more dragged into paying higher income tax in Reeves’s £26bn Budget squeeze
How the Budget will affect you: Winners and losers from Rachel Reeves’ tax rises and new spending
Tax calculator: See how Rachel Reeves’ Budget will affect you
From mansion tax to cash ISA changes: Key announcements in Reeves’ Budget
Key Points
- IFS accuses Rachel Reeves of breaching manifesto pledge with Budget
- Reeves admits ‘working people will pay more’ - but denies breaking manifesto tax pledge
- What did Labour's manifesto say?
- Analysis: The most chaotic Budget in living memory
- Income tax thresholds to freeze
- Reeves scraps George Osborne’s controversial two-child benefit cap
So, what does the Budget mean for your money?
18:44 , Athena StavrouThe 2025 Budget has now been announced, with major changes affecting everything from income tax and ISA limits to pensions, property, and savings.
With inflation still high and the government unveiling £26bn of new tax rises – including a freeze on personal tax thresholds, changes to salary sacrifice schemes, cash ISA allowances and dividends, and a mansion tax for homes over £2 million – households, savers, and investors could all feel the impact.
Personal finance expert Gabriel Nussbaum will be breaking down the details for readers during a live question and answer session at 1pm today – explaining what each change means for your money, when it takes effect, and how you can plan ahead.
If you'd like to ask a question, please submit it here.
That brings our coverage to an end
18:41 , Daniel KeaneThank you for following our live blog.
'External person' may have leaked Budget on OBR website, says chair
18:25 , Athena StavrouTax calculator: See how Rachel Reeves’ Budget will affect you
17:43 , Athena StavrouAfter weeks of leaks and frenzied speculation, Rachel Reeves revealed her second Budget in a speech in the House of Commons on Wednesday afternoon.
Use The Independent’s Budget calculator, created by tax advisory firm Blick Rothenberg, to work out what the announcements mean for you:
Tax calculator: See how Rachel Reeves’ Budget will affect you
Labour U-turns on key manifesto pledge
17:30 , Daniel KeaneMinisters have abandoned plans to give workers day-one protection against unfair dismissal in a bid to ensure the Government's Employment Rights Bill makes it through Parliament.
People will need to have six months of service to claim unfair dismissal against their employer, in a watering down of the legislation which breaches Labour's manifesto.
This is reduced from the current qualifying period of 24 months.
In an update on Thursday, the Department for Business and Trade (DBT) said: "The Government convened a series of constructive conversations between trade unions and business representatives.
"On the basis of the outcome of these discussions, the Government will now move forward on the issue of unfair dismissal protections in the Employment Rights Bill to ensure it can reach royal assent and keep to the Government's published delivery timeline."
What did Labour's manifesto say?
17:09 , Athena StavrouInfluential think-tank the Institute for Fiscal Studies (IFS) has said it believes Rachel Reeves has broken Labour’s manifesto on tax.
Labour’s 2024 election manifesto said: “Labour will not increase taxes on working people, which is why we will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT.”
Recap: IFS accuses Rachel Reeves of breaching manifesto pledge with Budget
16:47 , Athena StavrouThe Independent’s Whitehall editor Kate Devlin reports:
The highly respected think-tank the Institute for Fiscal Studies (IFS) has accused Rachel Reeves of breaching Labour’s manifesto pledge with the Budget.
In her opening remarks at a briefing on the Budget, IFS Director Helen Miller said that as a result of the income tax threshold freezes and other measure “National Insurance will increase. I would call that a breach of the manifesto.”
She also hit out at the three-year freezes in personal tax thresholds between 2028 and 2031, saying a “key feature of this measure is that no one knows how much it will raise or how big the effects will be on taxpayers. The structure of the tax system has been left to the vagaries of future inflation.”
Awkward moment Susanna Reid flusters Rachel Reeves in Budget grilling
16:24 , Athena Stavrou‘You will be worse off’: Martin Lewis reveals what Rachel Reeves’s Budget will mean for your wallet
15:55 , Athena Stavrou
‘You will be worse off’: Martin Lewis reveals what Reeves’ Budget will mean for you
Government rejects OBR's estimate of digital ID cost
15:23 , Athena StavrouThe Independent’s political correspondent Millie Cooke reports:
Downing Street said it did not “recognise” a figure putting the cost of the digital ID scheme at £1.8 billion over three years.
The prime minister’s official spokesman said: “The number in the OBR forecast was an initial early estimate spread over a number of years.
“We don’t recognise it as an accurate cost of the programme, the scope of which is yet to be decided, let alone costed.
“Any costs in this spending review period will be met within existing settlements. The government will run a full consultation in due course.”
IFS calls on government to ‘step back’ and stop disincentivising growth
14:58 , Athena StavrouThe Independent’s Whitehall editor Kate Devlin reports:
Asked how Labour can improve growth, IFS director Helen Miller called on the government to “step back”.
“I think a lot of what we need to do is step back”, as many part of the tax system currently “disincentivise” growth, she told a post-Budget briefing.
She also warned: “The chancellor, like her predecessors, continues to shy away from meaningful tax reform that could move the dial. This felt mostly like the Budget of a Government trying to scrape through.
“Of course, no fiscal event can do everything, and reform is hard. But given the scale of the challenges we face, and given the Government’s lofty rhetoric about change, and its ambitions on growth, I think we’re entitled to ask for more.”
Jenrick accuses Lammy of U-turning on his views while in government
14:39 , Athena StavrouThe Independent’s political correspondent Millie Cooke reports:
Robert Jenrick has accused David Lammy of doing "the complete opposite" of his previous views now he is in government as he attacked proposals to scrap jury trials for all cases except rape, murder and manslaughter cases.
The shadow justice secretary told the Commons "Jury trials are fundamental to the justice system.
They are fundamental to our democracy and we must protect them.
Not my words, those are the justice secretary's himself. And this time he was right.
He added: "There is wisdom in 12 ordinary citizens pooling their collective experiences of the world. But now he's in government, he is doing the complete opposite."
It comes after Mr Lammy, in a social media comment posted five years ago, said jury trials are a "fundamental part of our democratic settlement", adding that "Criminal trials without juries are a bad idea.”
Treasury refuses to rule out future tax rises
14:24 , Athena StavrouThe Independent’s political correspondent Millie Cooke reports:
The Treasury has once again refused to rule out coming back for more tax rises, saying "no government would write future budgets now".
But the chancellor's official spokesperson added: "The chancellor has doubled the headroom, she has set out reforms to the tax system to make it both fairer and more sustainable."
Asked about the OBR's decision not to rate any of the government's policies positive for growth, the spokesperson said: "Just because they're not necessarily scored in the spreadsheet doesn’t meant they're not the right thing to do... I think [the chancellor] would say forecasts are there to be beaten.”
Downing Street refuses to rule out farms being covered by mansion tax
14:10 , Athena StavrouThe Independent’s political correspondent Millie Cooke reports:
The government has failed to rule out hitting farms with its new mansion tax, which will be applied to properties worth more than £2m.
The prime minister's official spokesperson, asked whether farms would be covered, pointed to the upcoming consultation on the tax, saying he would not get ahead of that.
It comes after outrage from the agricultural industry after the government last year announced that farms worth more than £1m would be subject to 20 per cent inheritance tax.
Nearly a quarter of houses hit by the Mansion Tax are in just three London boroughs, IFS says
13:50 , Athena StavrouThe Independent’s Whitehall editor Kate Devlin reports:
The IFS says that when it comes to the Mansion Tax, which will hit all properties worth £2m and above from 2028, nearly a quarter of them – 23 per cent - will be in just three London boroughs - Kensington and Chelsea, Camden and Westminster.
The IFS describes this as a “very geographically concentrated tax base”.
Budget 'profound disappointment', as only 1 in 6 believe government will spend enough to meet VAWG pledge
13:19 , Athena StavrouLeading domestic abuse charity Refuge has called Rachel Reeves’ Budget a “profound disappointment”.
“The Autumn Budget was a critical moment for the Government to demonstrate its commitment to women and girls,” Ellie Butt, Head of Policy and Public Affairs at Refuge said.
“Instead, it marks yet another missed opportunity to show survivors that it is serious about its pledge, with the Chancellor once again failing to prioritise VAWG in the Budget.”
New research from the charity has revealed just 1 in 6 believe the government will spend enough to meet it’s violence against women and girls pledge.
The data, commissioned via YouGov, also found that nearly half (49%) say the Government is not investing enough, while 35% are unsure.
Ms Butt added: “The VAWG sector is in a worse position than ever. Some services have been pushed beyond breaking point and are now being forced to close, and we still have no sign of the long-anticipated VAWG strategy. Although the funding gap pre-dated this Government, continued delays have caused lasting – and in some cases irreversible – damage to vital services.”
Ask Me Anything: Join finance expert now for your questions on the Budget
13:05 , Karl MatchettIf you have questions over any aspect of yesterday’s Budget affecting your personal finance - ISAs, pensions, taxes, benefits and anything else related - then now’s the time to jump over to our Ask Me Anything on the Money page.
You can join Gabriel Nussbaum (ThatMoneyGuy on Instagram and TikTok) live for the next hour following the below link - ask your questions in the comments section and he’ll be answering as many as possible.
Join Budget Q&A with our money expert – tackling pensions and more
‘External person’ may have had access to leaked Budget document link
13:00 , Athena StavrouAn “external person” may have been able to access the link to the Office for Budget Responsibility (OBR)’s fiscal outlook which was published prematurely before the Budget, the head of the watchdog has said.
The document revealed the contents of Rachel Reeves’ Budget and was accidentally published shortly before midday on Wednesday, half an hour before the Chancellor announced the measures.
In an interview with BBC Radio 4’s Today programme on Thursday morning, OBR chairman Richard Hughes said of the investigation into the incident: “Well, the documents weren’t published on our webpage itself.
“It appears there was a link that someone was able to access – an external person.
“We need to get to the bottom of what exactly happened. We’re going to do a full investigation.”
Starmer says Budget ‘asked everybody to contribute’ to protect public services
12:20 , Athena StavrouSir Keir Starmer has said that the Budget “asked everybody to make a contribution” in order to protect public services and help people struggling with the cost of living.
The prime minister said he was “not going to apologise for lifting half a million children out of poverty”, as he hit back at claims the measure was announced to appease restive Labour MPs.
Asked by the BBC if Labour had broken its manifesto commitment not to raise headline taxes on working people, the Sir Keir replied: “We made a number of commitments in our manifesto which we have kept, but I accept that… we have asked everybody to make a contribution.
“I tell your viewers precisely why that is: to make sure that we can protect our NHS, which needs to be there for them and their families when they need it. Everybody understands that.”
Threshold at which student loan repayments start predicted to be almost the same as the minimum wage in five years
12:13 , Athena StavrouThe Independent’s Whitehall editor Kate Devlin reports:
For years graduates in England have had a bit of breathing room in which they did not have to repay their student loan if they were not earning enough.
But that could be all but about to end.Rachel Reeves’ Budget has frozen the threshold at which repayments start at £29,385 until 2030.
At the same time inflation is expected to drive up the national minimum wage over the same period - meaning that by 2030 it is expected to rise to £28,995 a year, just £400 less than the repayment threshold, according to a prediction by the Office for Budget Responsibility published alongside the Budget, according to the FT.
Once students earn over threshold, 9 per cent of their earnings are deducted to cover their student loan.
The threshold freeze affects those on what are known as Plan 2 loan schemes, starting their courses between 2012 and2023.
Budget forgot pubs 'in greatest hour of need'
11:33 , Athena StavrouOne sector that had been crying out for help before yesterday’s Budget was the hospitality industry.
Pubs in particular have been warning the government that it is getting harder to keep their doors open - but have said this Budget will “cripple our already struggling hospitality sector”.
Tom McNeeney, who has run The Oxford in Rochdale for 13 years, said reforms to business rates - which raises rates on properties worth over half a million - will greatly affect pubs as the average valuation of one in the UK is £542,000.
He said this, coupled with the higher rates of pay in 16-21 year olds, mean the sector will see this “epidemic of unemployment reach new highs next year followed by even more closures of cafes, restaurants and pubs that are proved to be beneficial to the social and mental health of the nation.”
“In short it’s a budget that forgot an entire industry in its greatest hour of need,” he told The Independent.
“With no support coming Rachel Reeves we will spend the year until the next budget driving past more and more closed businesses, more family institutions gone from our towns and villages, more cities where independent hospitality can’t survive - and she’ll be burdened with knowing she alone is responsible.”
Analysis: Reeves’ own words proves her semantic defence on tax is wrong
11:31 , Athena StavrouThe Independent’s political editor David Maddox reports:
The chancellor has been on the morning round claiming that technically she has not broken the manifesto promise to not raise income tax, VAT or national insurance contributions “for working people”.
Rachel Reeves’ argument is that because the rates themselves have remained the same then she has kept her word.
For the 1.7 million people who will see a rise in their tax as a result of the income tax threshold freeze to 2031 that will probably ring hollow and just sound like a semantic argument.
And the chancellor a year ago agreed with them that she was breaking the manifesto commitment by freezing thresholds.
In last year's Budget, Ms Reeves’: "I have come to the conclusion that extending the threshold freeze would hurt working people. It would take more money out of their payslips. I am keeping every single promise on tax that I made in our manifesto.”
This is the second year in a row that she has used semantics to excuse a breach of the manifesto commitment.
The massive hike in employers national insurance contributions actually broke the manifesto pledge but she insisted at the time it was only employee contributions which was covered because of the focus on “working people”.
IFS warns of ‘more tough budgets to come’ without growth
11:11 , Athena StavrouThe Independent’s Whitehall editor Kate Devlin reports:
IFS director Helen Miller said she felt “underwhelmed” and that this was “not a Budget that feels particularly big on ambition. At least not relative to the scale of the challenges we face”.
She said the fact that average disposable incomes will only grow by about half a percent per year this parliament, was “truly dismal, especially when compared to the more than 2% per year we achieved across every parliament from the mid-1980s to mid-2000s”.
She added: “At the last Budget the Chancellor said, ‘Every Budget I deliver will be focused on our mission to growth the economy’.
“That wasn’t on show yesterday… given the scale of the challenges we face, and given the government's lofty rhetoric about change, and its ambitions on growth, I think we're entitled to ask for more.”
She went on to warn that without “higher growth there will be plenty more tough Budgets to come."
No final decisions have been taken on trial by jury, says justice minister
10:57 , Athena StavrouIn some political news away from the Budget, MPs in the Commons are discussion the suggestion of scrapping jury trials except for the most serious of crimes.
The Independent’s political correspondent Millie Cooke reports:
"No final decisions have been made" on trial by jury, justice minister Sarah Sackman told the Commons.
It comes after justice secretary David Lammy wrote to officials suggesting only rape, murder and manslaughter cases might be heard by juries under plans to overhaul the courts system.
Responding to an urgent question from the shadow justice secretary, Ms Sackman said a "crisis of this scale requires bold action to get the system moving and to deliver swifter justice for victims".
She added: "No final decisions have been made on exactly how to take forward the blueprint that Sir Brian [Leveson] and his expert panel has set down and I suggest the House waits for that response.
"But let me be clear, jury trials will always be a cornerstone of British justice. This government will do whatever it takes to protect the fundamental right to a fair trial."
What did Labour's manifesto say?
10:38 , Athena StavrouInfluential think-tank the Institute for Fiscal Studies (IFS) has said it believes Rachel Reeves has broken Labour’s manifesto on tax.
Labour’s 2024 election manifesto said: “Labour will not increase taxes on working people, which is why we will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT.”
IFS warns cuts to energy bills will only be a ‘paltry’ £39 by 2029
10:33 , Athena StavrouThe Independent’s Whitehall editor Kate Devlin reports:
Rachel Reeves announced cuts to energy bills worth £150 in her Budget.
But IFS director Helen Miller said: “The government said that the measures it is introducing will save households £150 per year off their energy bills.
“While it has given some substantial tax cuts on energy bills over the next few years, the longer-term offerings are much more paltry, cutting only £39 per year off bills from 2029–30 onwards.”
IFS accuses Rachel Reeves of breaching manifesto pledge with Budget
10:31 , Athena StavrouThe Independent’s Whitehall editor Kate Devlin reports:
The highly respected think-tank the Institute for Fiscal Studies (IFS) has accused Rachel Reeves of breaching Labour’s manifesto pledge with the Budget.
In her opening remarks at a briefing on the Budget, IFS Director Helen Miller said that as a result of the income tax threshold freezes and other measure “National Insurance will increase. I would call that a breach of the manifesto.”
She also hit out at the three-year freezes in personal tax thresholds between 2028 and 2031, saying a “key feature of this measure is that no one knows how much it will raise or how big the effects will be on taxpayers. The structure of the tax system has been left to the vagaries of future inflation.”
Dividend tax sends contradictory message
10:06 , Athena StavrouThe Independent’s business and money editor Karl Matchett reports:
From a personal finance perspective, more than a few aspects of yesterday's Budget appeared...contradictory, to say the least.
Grants available to buy some electric vehicles...but now you'll pay more to drive them.
Cutting cash ISA limits so people who want to continue saving have to use regular savings accounts instead...and now they'll be taxed more on interest too.
And encourage people to start investing...but charge them more tax on the rewards of that.
A two percentage points dividend tax increase might fly under the radar a little compared to some of the bigger changes affecting pensions and frozen thresholds, but it's another barrier against behaviour the government have said they want to encourage - as well as hampering small business owners.
“For a government desperate to encourage more people to invest their money rather than hide in cash, raising taxes on dividends is an odd move to take,” Dan Coatsworth, head of markets at AJ Bell, pointed out.
“Dividends function as rewards to compensate investors for the risk of putting their money in the markets. Losing more of that reward to the taxman is deeply frustrating to the investor.”
Tax calculator: See how Rachel Reeves’ Budget will affect you
09:47 , Athena StavrouAfter weeks of leaks and frenzied speculation, Rachel Reeves revealed her second Budget in a speech in the House of Commons on Wednesday afternoon.
Use The Independent’s Budget calculator, created by tax advisory firm Blick Rothenberg, to work out what the announcements mean for you:
Tax calculator: See how Rachel Reeves’ Budget will affect you
So, what does the Budget mean for your money?
09:33 , Athena StavrouThe 2025 Budget has now been announced, with major changes affecting everything from income tax and ISA limits to pensions, property, and savings.
With inflation still high and the government unveiling £26bn of new tax rises – including a freeze on personal tax thresholds, changes to salary sacrifice schemes, cash ISA allowances and dividends, and a mansion tax for homes over £2 million – households, savers, and investors could all feel the impact.
Personal finance expert Gabriel Nussbaum will be breaking down the details for readers during a live question and answer session at 1pm today – explaining what each change means for your money, when it takes effect, and how you can plan ahead.
If you'd like to ask a question, please submit it here.
Analysis: Budget eases pressure on one party leader - Badenoch
09:21 , Athena StavrouThe Independent’s Whitehall Editor Kate Devlin reports:
Tory MPs were delighted with a speech by the Conservative leader attacking the Budget.
Ms Badenoch’s position has been under pressure amid dire poll ratings and lacklustre performances in the House of Commons.
But her speech, in which she said the Budget is a “total humiliation” for the chancellor and called for her to resign, has eased nerves among her own backbenches.
Polling expert and Tory peer Lord Hayward told The Independent: “Ironically, the budget may have been about saving Rachel Reeves’ and Keir Starmer’s jobs - but may have done more to save Kemi’s.”
Reeves refuses to rule out further tax rises
09:08 , Athena StavrouThe Independent’s political correspondent Millie Cooke reports:
The chancellor has refused to rule out coming back for more tax rises next year, telling BBC Radio 4's Today programme: “I'm not going to write future budgets.”
She added: “There's been plenty of speculation ahead of this budget... I am now determined to grow the economy so that we have the money for public services that we can get taxes down.”
None of Reeves' Budget measures boost growth, says OBR chief
08:49 , Athena StavrouThe Independent’s political correspondent Millie Cooke reports:
OBR chair Richard Hughes said "none of the measures" in Rachel Reeves' Budget will "have a material affect" on growth.
"In this particular Budget, none of the measures either positive or negative... would have a material affect on our forecast," he said.
"Both taxes and spending are up significantly in this Budget.
Asked about his comments, the chancellor to BBC Radio 4's Today Programme: "What they say in the documents is none of them meet the threshold that they now require for a single policy to be scored. So they haven't scored the India trade deal, the EU trade deal, the US trade deal, the Planning and Infrastructure Bill that in December will get royal assent, the pensions reform, the entrepreneurship package that I set out.
"They said that none of them individually... meet their 0.1 threshold. But I'm confident that the growth policies that we're pursuing will grow our economy."
Budget 'unlikely to benefit economic growth', tax experts say
08:33 , Athena StavrouEconomists have said it is unlikely Rachel Reeves’ Budget will “benefit economic growth”.
Chantal Van Stipriaan, partner at tax firm Blick Rothenberg, said her overall assessment of yesterday's Budget is one of chaos - adding it will be remembered for “many years to come”.
“The stress that has been caused by leaking throughout this process has been a disaster and has caused undue stress for working people, pensioners, and businesses,” she said.
“The freezing of the thresholds for an extra three years, a classic stealth tax, will mean not only the middle class families are going to pay more tax, many additional relatively low income individuals will be brought into the tax net, including people who will have to file tax returns for the first time, such as pensioners.”
She added: “The Budget will most likely result in a higher inflation and a higher unemployment and it’s unlikely it will benefit the economic growth of the country.”
Watch: Reeves fails to admit breaking Labour manifesto but says working people will have to contribute more
08:24 , Athena Stavrou'You're not going to write my obituary today': Reeves hits back at critics
08:12 , Athena StavrouThe Independent’s political correspondent Millie Cooke reports:
Rachel Reeves has hit back at critics of her budget, warning: "Lots of people have tried to write me off over the last 16 months, and you’re not going to write my obituary today”.
Speaking to Times Radio, she added: “I’m not going to apologise for lifting the two-child limit."When it was put to the Chancellor that she had raised tax on working people in order to put it into welfare, she said: “I don’t accept that.
“The OBR say that their revisions to productivity, reflecting the Conservatives’ legacy, is going to mean £16bn less tax revenue, and as a result, we have to fill that gap. But if we can grow the economy, as I’m determined to do, we can get that money back.”
She insisted she was “determined that we’re going to beat” the watchdog’s growth forecasts.
'This was my budget' Reeves hits back at accusations budget was for Labour backbenchers
07:56 , Athena StavrouRachel Reeves has hit back at accusations that yesterday's budget was an attempt to appease restless Labour backbenchers and save her job, after the government hiked taxes to pay for more welfare spending.
She told Sky News: "This was my budget yesterday, focused on my priorities and the government's priorities, cutting the cost of living, cutting NHS, waiting lists, and cutting borrowing and debt."
Reeves says OBR chief 'let me down' with breach
07:48 , Athena StavrouThe Independent’s political correspondent Millie Cooke reports:
OBR chief Richard Hughes "let me down" with yesterday's unprecedented Budget leak, Rachel Reeves has said, but insisted that she still has confidence in him.
The chancellor said there will be an investigation into the leak, which saw the OBR's response to the Budget published online around an hour before Ms Reeves addressed the Commons.
Asked if she still has confidence in the chair of the OBR, the chancellor told Sky News: "Richard Hughes wrote to me yesterday evening apologising for their error."
It was a serious error and a serious breach. They have announced an investigation which will report to me very quickly, but I do have confidence in Richard and the OBR, they do important work."But what happened yesterday, it did let me down and and it shouldn't have happened and it must never happen again."
Reeves refuses to admit Labour has broken manifesto pledge
07:31 , Athena StavrouThe Independent’s political correspondent Millie Cooke reports:
Rachel Reeves has refused to admit Labour has broken its manifesto pledge not to raise taxes on working people by freezing tax thresholds.
It comes despite the UK's leading economic think tank, the Institute for Fiscal Studies, on Thursday accusing the chancellor of breaching Labour's manifesto commitments on tax.
When it was pointed out to her that Labour's manifesto says the party “will not raises taxes on working people”, the chancellor added: “And then we go on to list those taxes” - arguing the manifesto pledge specifically referred to the rates of income tax, national insurance and VAT.
She added: “But I do recognise that yesterday, I have asked working people to contribute a bit more by freezing those thresholds for a further three years from 2028. I do recognise that that will mean that working people pay a bit more.”
Pressed again on whether Labour had broken the manifesto pledge not to raise taxes on working people, she said: “If you go on to read the next line, it talks about the rates, but I am not denying that this has an impact on working people.”
Reeves challenged over rise in welfare spending
07:27 , Tom BarnesRachel Reeves told a radio presenter challenging her over rising welfare spending that “lots of people have tried to write me off over the last 16 months, and you’re not going to write my obituary today”.
“I’m not going to apologise for lifting the two-child limit,” Mr Reeves told Times Radio.
When it was put to the Chancellor that she had raised tax on working people in order to put it into welfare, she said: “I don’t accept that.
“The OBR say that their revisions to productivity, reflecting the Conservatives’ legacy, is going to mean £16 billion less tax revenue, and as a result, we have to fill that gap. But if we can grow the economy, as I’m determined to do, we can get that money back.”
She insisted she was “determined that we’re going to beat” the watchdog’s growth forecasts.
Millions more dragged into paying higher income tax in £26bn squeeze - full report
07:00 , Jane DaltonMillions more dragged into paying higher income tax in Reeves’s £26bn Budget squeeze
Budget assault on squeezed middle, say LibDems
06:00 , Jane DaltonThe Liberal Democrats have branded Labour's Budget an "assault on the squeezed middle", pointing to forecasts by the Office for Budget Responsibility that one in four workers will pay the higher or additional rate of income tax by 2030-31.
The party's Treasury spokeswoman Daisy Cooper said: "This Budget was an assault on the squeezed middle. This Labour Government is abandoning the very voters who put them into power and hammering them with years more of unfair tax hikes.
"There's an easy way to get out of this vicious cycle and give people hope: go for growth through a much closer trade deal with the EU, including a customs union to tear up red tape and back British businesses."
Asylum could cost £1.4bn extra in three years, says watchdog
05:00 , Jane DaltonThe asylum system would cost an extra £1bn pounds by 2028-29 if spending remained at last year's level, the budget watchdog has said.
The Government has promised to end housing asylum-seekers in hotels by the next election and cut spending on asylum by £1.1bn.
But the forecast by the Office for Budget Responsibility (OBR) said the number of migrants arriving by small boat and asylum-seekers in supported accommodation has risen by 19% and 8% respectively on last year.
It said there could be an extra pressure of £1.4bn by 2028-29 if spending remained at 2024-25 levels.
The watchdog said: "The Home Office Spending Review settlement was made on the basis that the Home Office would fully stop the use of hotels for asylum-seekers in this Parliament, and asylum spending would be £1.1bn lower at £2.5bn in 2028-29 compared to 2025-26 plans.
"So far this year, the number of migrants arriving by small boat and asylum seekers in supported accommodation has risen by 19 and 8%, respectively, compared to last year.
"If spending on asylum remained at its 2024-25 level, this would imply £1.4bn of additional pressure on the Home Office budget by 2028-29."
Cash ISA options after Budget cut – and one exemption
04:00 , Jane Dalton.jpeg?width=1200&height=800&crop=1200:800)
Your cash ISA options after Budget cut – and the exemption you need to know about
Editorial: Budget will squeeze working people till it hurts
03:05 , Jane Dalton
Budget papers over cracks, say economists, as growth forecasts downgraded
02:10 , Jane Dalton
Budget ‘papers over cracks’, say economists as UK growth forecasts downgraded
Opinion: Budget was like the office whip-round nobody could avoid
01:10 , Jane DaltonReeves’s Budget was like the office whip-round nobody could quite avoid
Plan to shake up Lifetime Isa
00:15 , Jane DaltonA consultation will also be published in early next year on a "new, simpler" Isa product to support first-time buyers, Rachel Reeves announced..
Once available, the new product will be offered in place of the Lifetime Isa (Lisa).
Money expert Martin Lewis explains:
I know many LISA holders are asking questions. A few facts may clarify things
— Martin Lewis (@MartinSLewis) November 26, 2025
1. There are no imminent changes due with LISAs
2. A consultation is due next year on a new first time buyer isa. That is unlikely to happen until Apr 27 or 28
3. Even if there is a new product, the…
Watch: Key things you need to know about Budget
Wednesday 26 November 2025 23:15 , Jane DaltonVeteran Tory MP urges scrapping of pensions triple lock
Wednesday 26 November 2025 22:15 , Jane DaltonMPs have been urged to show "courage" by agreeing to end the pensions triple lock.
The country's longest continuously serving MP described the policy as unsustainable, after Chancellor Rachel Reeves unveiled a 4.8% increase in the basic and new state pension next year.
Sir Edward Leigh told the Commons: "We all know that the triple lock is unsustainable. You cannot have a situation where people of my generation are consuming an ever-greater proportion of national wealth through the state pension.
"Frankly, our government never dared tackle it having brought it in because they knew that the Labour Party would crucify them at the ballot box.
"Now the Labour Party is caught in the same bind.
"The fact is, it is completely unfair on younger people if the burden of older people, through the triple lock, increases year by year."
The 75-year-old Conservative MP said he would "get into trouble" for criticising the policy, brought in by the coalition government.
It guarantees the state pension will rise each year in line with either average earnings growth, CPI (Consumer Prices Index) inflation, or 2.5% - whichever is highest.
Father of the House Sir Edward added: "We all have children, we all have grandchildren. We all see our own children struggling to get on the housing market."
Oil and gas extraction near North Sea fields to be allowed
Wednesday 26 November 2025 21:20 , Jane Dalton
UK Government to allow oil and gas extraction near existing North Sea fields
Dropping child benefit cap calms Labour backbenchers
Wednesday 26 November 2025 20:50 , Jane DaltonScrapping the two-child benefit cap appears to have calmed discontented Labour backbenchers as the Chancellor urged MPs to "win the argument" on the Budget.
Recent weeks have seen growing backbench anger with the Labour leadership but Rachel Reeves' announcement was broadly welcomed by Labour MPs, who highlighted the decision to axe the two-child limit as a key achievement.
The Tribune Group of "soft left" MPs, which includes former transport secretary Louise Haigh and former whip Vicky Foxcroft, who resigned over welfare cuts, said the Budget was "a Labour Budget, demonstrating Labour values".
Millions more dragged into higher income tax band - full report
Wednesday 26 November 2025 20:25 , Jane DaltonMillions more dragged into paying higher income tax in Reeves’s £26bn Budget squeeze
Badenoch admits Tories made mistakes
Wednesday 26 November 2025 19:57 , Jane DaltonKemi Badenoch has admitted the Conservatives made mistakes in office.
“I do believe the Conservatives will come back,” she said.
“They made a lot of mistakes. Don't get me wrong, I'm fixing that.
“We're under new leadership, and I'm working very hard to win back people's trust, but I do worry about how big the mess they're [Labour] leaving will be, and that restricts the amount of promises that we can make, because we will have to tackle that mess first.”
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Wednesday 26 November 2025 19:52 , Jane DaltonLifting child benefit cap will drive others into poverty, says Tory leader
Wednesday 26 November 2025 19:23 , Jane DaltonKemi Badenoch has claimed people are going to be pushed into poverty to pay for the lifting of the child benefit cap.
The Tory leader said her party would reverse the £3bn Budget move.
“We think what Labour is doing is wrong. They are taxing other people to pay more benefits. Other people are going to be pushed into poverty to pay for benefits for others. I didn't think that's fair,” she told LBC.
“How much should other people have to pay in order to subsidise a different group. And we are getting to a point where more and more people are net takers from the state, and fewer and fewer people on net contributors...
“What's happening is that the country is borrowing so much that we are now spending more on interest than we are on education, on so many other budgets. Who's going to pay for that? It's those same children who we should be thinking about. Why should we leave them with our debts?”
Reeves whacking people with random taxes, says Badenoch
Wednesday 26 November 2025 19:15 , Jane DaltonKemi Badenoch has accused the chancellor of “whacking” people with all sorts of random taxes.
“I will have constituents who have gone and bought an electric vehicle because they maybe had a subsidy from the previous government,” she told LBC.
“They live in a rural area, and they don't think that they have to pay fuel duty.
“They've been whacked with something. Landlords have been whacked over their taxi. It's just everything - holidays, milkshakes, just all sorts of random things. There's 43 taxes in this budget that's going to hit a hell of a lot of people.”
Badenoch mocks Reeves over misogyny complaints
Wednesday 26 November 2025 18:54 , Jane Dalton
Badenoch takes aim at Reeves over chancellor’s complaints of misogyny
Watch: Reeves refuses to rule out further tax rises
Wednesday 26 November 2025 18:37 , Jane DaltonSchools could face spending cuts when 'special needs' costs shift, OBR warns
Wednesday 26 November 2025 18:20 , Jane DaltonSchools could face a fall in spending due to the Government taking on the cost of special educational needs and disabilities (Send) provision centrally from 2028-29, the Office for Budget Responsibility (OBR) has warned.
The Government announced in the Budget on Wednesday that local authorities will not be expected to fund future Send costs.
No savings have been identified to offset the estimated £6 billion pressure taking on Send spending, the OBR said.
If the £6 billion needed comes from the Department for Education's core schools budget in 2028/29, it could mean a 1.7% real fall in spending per pupil in mainstream schools, the OBR said, rather than the 2.4% increase the Government had planned.
How the Budget will affect you: The four biggest policy changes
Wednesday 26 November 2025 18:09 , Harriette BoucherTax calculator: See how Budget will affect you
Wednesday 26 November 2025 17:59 , Jane DaltonTax calculator: See how Rachel Reeves’ Budget will affect you
Watch: Reeves dodges question on her future
Wednesday 26 November 2025 17:40 , Jane DaltonOBR chief apologises and launches investigation into blunder
Wednesday 26 November 2025 17:28 , Jane DaltonThe head of the Office for Budget Responsibility (OBR) has apologised and launched an investigation after it prematurely published the contents of Rachel Reeves' Budget.
Richard Hughes, chairman of the independent watchdog, said its fiscal outlook was accidentally published shortly before midday, half an hour before Ms Reeves announced the measures.
The OBR earlier said a "technical error" in the organisation was to blame.
Shadow chancellor Sir Mel Stride told MPs the leak was outrageous, adding that the document included market-sensitive information and the leak might constitute a criminal offence.
Sir Mel later told journalists that he was not calling for the resignation of Mr Hughes "at this point".
Ms Reeves described the leak as deeply disappointing and a serious error on their part.
‘A kick in the teeth’: Readers say Reeves punishing responsibility
Wednesday 26 November 2025 17:25 , Jane Dalton
‘A kick in the teeth’: Readers say Reeves’ Budget ‘punishes responsibility’
Reeves hails benefits reforms
Wednesday 26 November 2025 17:04 , Jane DaltonRachel Reeves said the Government would not leave the welfare system unchanged.
Asked about the benefits bill, the Chancellor said: "We're not going to leave the welfare system unchanged...
"I made some reforms today so that if you live abroad, you can't pay nominal amounts of money to access the state pension, more face-to-face assessments for disability benefits... reforming Motability, so it meets its original purpose of affordable leases for disabled people, not subsidising a Mercedes Benz.”
She said she had introduced funding for a youth guarantee, which means that a young person would be guaranteed a place at college, an apprenticeship or personalised support, and if, after 18 months they did not have work, they would be guaranteed a job, but not benefits.
"And that, again, is an important reform to help deal with the issue of too many young people, not in education, employment or training."
Electric car drivers to pay for every mile, including abroad
Wednesday 26 November 2025 16:54 , Jane DaltonThe chancellor has confirmed a new tax for electric vehicle drivers, eventually designed to replace fuel duty.
Like that levy, the amount motorists pay will vary based on the amount they drive.
What will not be exempted, however, is when they drive abroad.
The Treasury says it had decided not to charge people based on when or where they drive “to protect motorists’ privacy”.
Instead cars will have their mileage checked at their annual MoT.
Ministers have decided this means mileage driven overseas by UK registered cars will be included, for the sake of simplicity.
Shadow chancellor brands Budget 'dog's breakfast'
Wednesday 26 November 2025 16:47 , Jane DaltonShadow chancellor Sir Mel Stride has compared Rachel Reeves' Budget to a "dog's breakfast".
Sir Mel said: "“It has been this smorgasbord that’s turned out to be a bit of a dog’s breakfast, in which she’s had to straddle around and put up all sorts of different taxes and these are ultimately going to be borne by hardworking people up and down the country.”
He said the chancellor's position was untenable.
Rachel Reeves said she wasn't coming back for more.
— Mel Stride (@MelJStride) November 26, 2025
She just has.
£26 billion of new taxes. pic.twitter.com/yQ4nLa5HQW
How the Budget will affect you: Winners and losers
Wednesday 26 November 2025 16:33 , Jane Dalton
How the Budget will affect you: Winners and losers from Reeves’ speech
Reeves refuses to rule out further tax rises
Wednesday 26 November 2025 16:31 , Jane DaltonRachel Reeves has refused to rule out coming back for more tax rises, saying: “I can’t write future budgets”.
The chancellor broke a promise she made last year to not come back for more.
Explaining her decision to go back on her word, she said: “Last year, I had to fill the £22bn black hole in the public finances. What we didn’t know then was that actually productivity growth was weaker than the OBR had forecast”.
She added: “I believe we can beat those forecasts… the Conservatives’ legacy is not our country’s destiny but we also all know that if you ignore the forecasts you pay a huge price in the cost of government borrowing.”
