Rachel Reeves, Chancellor of the Exchequer, delivered the new Labour government’s first budget on 30 October, which aimed to rebuild Britain.
However, more than a month on there continue to be mixed feelings towards the new policies. The River rounded up the top three most controversial plans versus the top three most popular ones.
Top three most controversial:
- Increasing National Insurance (NI) for businesses
Currently employers pay NI of 13.8% on workers earnings above £175 a week – the planned increase to 15.8% would raise more money for the treasury. The government has defended this new increase having said it will be put the money into the NHS and schools.
James Tunbridge said: “I’m lucky enough to earn enough that I don’t think it would effect me too greatly, I’m happy that they’ve promised the money will go to places like the NHS but others that need that money are going to suffer and that’s the worrying part, but knowing the government they’ll probably u-turn.”
This is a controversial plan given that some businesses say it will impact pay rises and employment.
2. Increase to VAT on tobacco
The tobacco duty rate increased by 2% above the retail price index, a measurement of inflation used to measure the cost of retail goods and services.
This has led to talk of a ‘nanny state’ – a term first used in the 1960s by the Conservative Party, they argued the British public needed to be controlled by the government less.
Gerald Gashi had said: “Things are already expensive as is, why would you increase everything further, they don’t care about our health they just want more money.”
Labour have argued that the increase to the cost of tobacco products is to deter smokers, a continuation of the aims of the Conservative Party who had previously announced that they want a ‘smoke free’ England by 2030.
3. Private school fees
Prime Minister Kier Starmer promised during his summer 2024 campaign that if elected he would impose taxes on private school tuition fees.
Now elected the budget is following through with this. They plan to remove the VAT exemption that private school fees have and as of 1 January 2025 VAT would be charged at the standard rate of 20%.
On the parliamentary library the House of Commons had already estimated that this change would result in nearly 37,000 pupils leaving private school for state schools. The Labour government defends this change on the gov.uk website however stating: “The government is removing the VAT exemption for education and boarding services provided by private schools in order to raise revenue to support the public finances and help deliver the government’s commitments relating to education and young people, including the 94% of school children who attend state schools.”
Top three popular policies:
- Increased funding for public sectors
The autumn budget outlined the largest budget increase for the NHS since 2010, Labour plan to spend an extra £25.7bn this year and next.
The money will be put toward new surgical hubs, radiotherapy machines, new technology, social care and mental health crisis centres.
Alongside this, Reeves said funding for schools would increase, with a further £2.3bn being put into state schools, primarily focused on the recruitment of new teachers and those with special needs.
2. National living wage increase
Reeves had said national living wage will see a 6.7% increase to £12.21 per hour, this will affect over three million workers from April.
3. Housing investment
A £5bn investment for housing over five years was announced, as well as a boost to the affordable homes programme. Ashfords real estates said this investment would possibly stabilise the housing market by building affordable homes.