Chancellor Rachel Reeves has vowed to make 'fair and necessary choices' in Wednesday's budget, promising both action on the cost of living and the biggest drive for growth in a generation, while confronting a £30bn black hole in the public finances.
A Budget of Contrasts: Growth Pledges and Tax Rises
In a statement released ahead of the budget, Ms Reeves sought to reassure the public, declaring she 'will not return Britain back to austerity'. She committed to helping families with the soaring cost of living and outlined ambitious investment plans for infrastructure, housing, security, defence, education, and skills.
However, this growth agenda comes with a significant price tag. Due to a downgrade in productivity growth forecasts, policy U-turns on winter fuel allowance and benefits, and what the Chancellor terms 'heightened global uncertainty', she is expected to unveil what political commentators are calling a 'smorgasbord' of tax rises.
The £30bn Question: How the Black Hole Will Be Filled
The centrepiece of the tax-raising measures is anticipated to be an extension of the freeze on income tax thresholds for another two years beyond 2028, a move forecast to raise approximately £8bn. This decision is likely to draw fierce criticism from opposition parties, given that the Chancellor herself argued last year that such an extension would 'hurt working people'.
Other confirmed and reported tax measures include:
- A new levy allowing local authorities to tax tourists.
- Expanding the sugar tax to include packaged milkshakes and lattes.
- Imposing extra taxes on higher-value properties.
- A potential cap on tax-free allowances for salary sacrifice schemes.
- Increased taxes on gambling firms.
- The introduction of a pay-per-mile scheme for electric vehicles.
Key Spending Announcements and Political Fallout
The revenue raised is set to fund several significant spending pledges. The government has already confirmed an above-inflation £550 annual increase for the state pension, benefiting 13 million pensioners. Other confirmed measures include a freeze on prescription prices and rail fares, and a £5 million fund to refresh secondary school libraries.
In a bid to slash NHS waiting lists, extra funding will be announced to expand the 'Neighbourhood Health Service' and invest £300 million in technology upgrades. Furthermore, the national living wage will see a 4.1% rise to £12.71 per hour for workers aged 21 and over, amounting to a £900 annual increase for full-time workers.
Benefits are also expected to be uprated in line with inflation at a cost of £6bn, and the Chancellor is under pressure from her own backbenchers to partially or fully lift the controversial two-child benefits cap.
The opposition was quick to condemn the budget's direction. Conservative shadow chancellor Sir Mel Stride accused Ms Reeves of breaking promises and described her choices as 'political weakness'. Liberal Democrat deputy leader Daisy Cooper spoke of a 'cost-of-living permacrisis' and 'yet more betrayals'.
The budget will be delivered on Tuesday, November 25, 2025, with the Chancellor's speech scheduled for 12:30 PM following Prime Minister's Questions.
