Rachel Reeves is set to make commitments to safeguard the NHS and enhance the financial situation for struggling individuals in a significant address before the Budget. The Chancellor is expected to pledge to make necessary decisions to address a £20 to £30 billion deficit in public finances. Reeves is anticipated to announce these choices will have a lasting impact on the economy.
Recently, Keir Starmer declined to reiterate Labour’s promise to shield working people from tax hikes, leading to speculation that Reeves might increase income tax, potentially contradicting the party’s election pledges. Reeves will emphasize the importance of understanding the economic circumstances and principles guiding her decisions in shaping the future economy during her speech from Downing Street.
In her upcoming Budget, Reeves will prioritize strengthening the economy for the present and future while aligning with the government’s core values of fairness and opportunity, focusing on NHS protection, debt reduction, and cost of living improvements. One of the proposed measures to aid with the cost of living is a potential reduction in VAT on energy bills, estimated to save households around £86 annually.
Furthermore, a leading think tank, the Resolution Foundation, is urging Reeves to take decisive actions in the forthcoming Budget to rectify public finances. Suggestions include raising income tax by 2p and reducing employee national insurance by the same amount to alleviate the impact on working individuals. This strategy aims to raise funds while safeguarding wages and redirecting attention towards growth rather than financial deficits.
James Smith, the research director at the Resolution Foundation, emphasized the importance of shifting focus towards poverty reduction and boosting growth through strategic budget decisions. The Foundation’s proposals aim to create a Budget centered on addressing economic challenges and improving livelihoods.
