Early evening summary
Rachel Reeves has declared her budget will slash living costs for millions including ending the two-child benefit limit and cutting energy bills, but taxes are set to soar by £26bn to plug a gaping shortfall in the public finances. As Richard Partington and Jessica Elgot report, major measures in the budget leaked early in a shock accidental release by the Office for Budget Responsibility (OBR), triggering an instant bond market reaction an hour before the chancellor was on her feet in the House of Commons. After months of speculation, Reeves said her measures would put the public finances on a sustainable path while building “a fairer, a stronger, a more secure Britain” by tackling inflation and investing in large infrastructure projects. She also built herself a larger £22bn of headroom – to stave off future cycles of pre-budget speculation that she will miss her fiscal rules and to bring down borrowing costs. Here are assessments of the budget from a Guardian panel featuring Polly Toynbee, Julia Davies, Abi O’Connor, Jason Okundaye, John Redwood, Sarah Nankivell and Andy Summers.
Here is the assessment by our political editor, Pippa Crerar.
And here is an extract from Pippa’s article.
While the Treasury insists its plans are realistic and deliverable, there is also some scepticism inside the party over the timing, with the biggest rises pencilled in for around the time of the next election.
And there is deep concern over living standards. The Resolution Foundation said the outlook had worsened significantly, with disposable incomes rising by a “paltry” 0.5% a year over this parliament – the second worst since records began in the 1950s – and a projected rise in unemployment.
But for now at least, the budget has done its job politically and averted an immediate leadership crisis. The whispers around Starmer and his chancellor’s future have subsided.
Kemi Badenoch, the Tory leader, has called for Reeves to be sacked. In a statement tonight she said:
This Labour benefits street budget is a total humiliation – and a total betrayal of the British people.
Labour promised not to raise tax in their manifesto. Then, when Rachel Reeves broke that promise last autumn, she assured us she wouldn’t be back for more.
Now, instead of showing some backbone and getting spending under control, Reeves has launched a welfare splurge and paid for it by hiking taxes on working people.
Reeves has rejected claims the tax threshold freeze breaks a manifesto promise. (See 4.32pm.)
Updated
Lib Dems express alarm at Treasury review of digital services tax that says over time it could be replaced
When the government was negotiating its trade agreement with the US, there was constant speculation that the digital services tax (DST), which is unpopular with American tech companies, might be watered down as a concession to the White House. That never happened. But today the Treasury has announced a review of the DST that suggests the government does expect it to eventually be replaced.
The review says:
The UK’s objective has always been to ensure that all businesses pay their fair share of UK tax, based on the value they derive from their UK activities, irrespective of where they are headquartered. The government understands that there is a lot of interest from stakeholders around the future of DST. As confirmed in the corporate tax roadmap, the DST remains an interim measure and the UK is committed to remove it once an appropriate global solution on the reallocation of taxing rights is in place.
Commenting on this, Daisy Cooper, the Lib Dem Treasury spokesperson, said:
If the government is preparing to slash taxes for the world’s richest man, Elon Musk, while hiking taxes for millions of British families, this would be nothing short of a scandal.
Rather than bowing down to Trump and his US tech barons, it’s about time the government asks those social media giants who are making billions in profit to pay their fair share.
