UK finance Minister Rachel Reeves says budget to raise taxes by £40 billion

Rachel Reeves, the finance minister of the United Kingdom, on Wednesday (October 30) said that the first budget delivered by the Keir Starmer government will hike the taxes in the country by £40 billion ($52 billion).

The aim of the hike is to fill the “black hole” that the Labour government says was left because of 14 years of Conservative rule leaving public services broken.

The blame on past Conservative governments

Reeves justified her decision to hike taxes, chalking it up to the dire state of the country’s finances that the Labour government inherited.

Reeves, a former Bank of England economist, said that when the Labour Party came to power in July, they inherited a £22 billion shortfall in public finances.

This shortfall has been worsened by the absence of compensation payments, including those for victims of the infected blood scandal, as well as insufficient funding for public services.

“Any Chancellor standing here today would 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 service,” she said in her budget speech.

No tax hikes for working people

Reeves reiterated that working people won’t face higher taxes in their places.

Working people won’t face higher taxes in their payslips.

— Rachel Reeves (@RachelReevesMP) October 30, 2024

She had first made this declaration following the Labour government’s poll win in July following snap elections.

Where will the money come from?

Britain’s first woman chancellor of the exchequer said that £25 billion would come from hiking employers’ national insurance contributions– a payrolls tax used to help pay for social care.

Changes to inheritance tax will raise more than £2 billion. The government, headed by Prime Minister Keir Starmer, is also raiding taxes on capital gains and property purchases to fill their financing needs.

With inputs from agencies