Budget promises increase in public spending

The Chancellor has delivered Labour’s first budget in 14 years.

Rachel Reeves has promised to rebuild Britain and fix the economy.

The Budget aims to fix the NHS and rebuild Britain, while at the same time, ensuring that working people don’t pay higher taxes from their payslips.

It is hoped that the plans outlined in the budget will boost public investment by over £100 billion over the next five years.

As promised there is no increase in National Insurance, VAT, or Income Tax on working people.

The budget commits to increasing day-to-day spending for public services by 3.3 per cent on average in real terms over this year, with a particular focus on the NHS, education and criminal justice.

There is also a crackdown on wasteful spending, with all government departments having a 2 per cent productivity, efficiency, and savings target.

As previously announced, the Chancellor has confirmed an additional £22.6 billion for day-to-day spending over two years for the Department of Health and Social care, supporting the NHS to deliver an extra 40,000 elective appointments per week.

There is also around £1.5 billion capital funding for new surgical hubs, diagnostic scanners and new beds across the NHS estate to create more treatment space in emergency departments, reduce waiting times and help shift more care into the community.

£100 million has been set aside to carry out 200 GP estate upgrades across England, supporting improved use of existing buildings and space, boosting productivity and enabling delivery of more appointments.

As part of a focus on rebuilding the NHS, there are increased taxes on things that are known to cause ill health. The government will renew the tobacco duty escalator which increases all tobacco duty rates by RPI+2 per cent plus an above escalator increase to hand rolling tobacco and introduce a new vaping duty at a flat rate of 22p/ml from October 2026, accompanied by a further one-off increase in tobacco duty to maintain financial incentive to choose vaping over smoking.

To fight obesity, the Soft Drinks Industry Levy will increase over the next five years to account for inflation since it was last updated in 2018, and the duty will also rise in line with inflation every year going forward.

When it comes to education, there is £4 billion for the sector, including £2.3 billion into the core schools’ budget which increases per pupil spending in real terms.

It is hoped this will allow 100 project plans to begin delivery across England next year.

There is also £1.4 billion for the school rebuilding programme, including an increase of £550 million this year.

From January 2025, the government will introduce 20 per cent VAT on education and boarding services provided for a charge by private schools. From April 2025, the government will also remove business rates charitable rate relief from private schools in England.

Infrastructure investment is a priority for the new government, with a focus on schools, hospitals, roads and homes.

An additional £500 million has been allocated for local road maintenance in 2025-26, bringing the total amount set aside for fixing the roads in England to 1.6 billion.

When it comes to public transport, an extra £200 million will be given to Metro Mayors for local transport in 2025/26, bringing City Region Sustainable Transport Settlements to over £1.3 billion and there is also more than £650 million for improving transport in towns, villages, and rural areas.

As previously announced, the bus fare cap will rise to £3.

In technology, there is £500 million for Project Gigabit and the Shared Rural Network next year.

In housing, there is £500 million in new funding for the Affordable Homes Programme.

Another of the government’s priorities is crime and justice. The new Border Security Command is set up to fight organised criminal gangs by deploying 100 new NCA officers and increasing cooperation with European intelligence agencies and police forces.

There are also plans to boost the processing of asylum claims, which along with other measures could cut asylum support costs by more than £4 billion over the next two years.

There is also mention of an initial commitment to boost visible neighbourhood policing with 13,000 more neighbourhood officers and PCSOs.