GovWire

The Chancellor has delivered a Budget to fix the foundations to deliver on the promise of change after a decade and a half of stagnation. She has set out plans to fix the NHS and rebuild Britain, while ensuring working people dont face higher taxes in their payslips.

The government was handed a challenging inheritance; 22 billion of unfunded in-year spending pressures, debt at its highest since the 1960s, unrealistic plans for departmental spending, and stagnating living standards.

As a mission-led government, the Chancellor has today made clear the difficult choices this government will make to rebuild the country. This Budget takes the difficult decisions on tax, spending and welfare to restore economic and fiscal stability, so that the government can invest in the countrys future and achieve its mission for growth. This means hospital waiting lists will be cut with room to invest in Britain to rebuild our schools, hospitals and broken roads.

The government is protecting working peoples living standards by raising the National Living Wage, cutting duty on draught pints, keeping bus fares down, and not increasing the main rates of income tax, employee national insurance, and VAT.

The Budget will help rebuild Britain by boosting public investment by over 100 billion over the next five years while exceeding the manifesto commitment to fix an extra 1 million potholes per year with an additional 500 million for local road maintenance in 2025-26.

Fixing the NHS and reforming public services

By repairing the public finances and restoring economic stability, the Budget delivers on a new settlement for public services, increasing day to day spending for public services by 3.3% on average in real terms over this year and next to fix the NHS, boost the education system and repair the criminal justice system.

This government has been clear from the start it will not tolerate wasteful spending and that means treating taxpayers money with respect. For the next financial year, all government departments have a 2% productivity, efficiency, and savings target, that is expected to save billions of pounds.

• 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, delivering on one of the Governments first aims in office to reduce waiting times in the NHS.
• The government is investing 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 will be earmarked 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.
• The Chancellor has focused on improving education as part of her first Budget, with an additional 4 billion for the sector, including 2.3 billion into the core schools budget which increases per pupil spending in real terms.
• This will allow 100 project plans to begin delivery across England next year and begin to tackle the crumbling school and college buildings across the country. This paves the way for a long-term strategy to improve schools nationwide so that students can learn in safe, state-of-the-art facilities, tailored to the needs of 21st-century education.
• The Chancellor will provide 1.4 billion for the school rebuilding programme, including an increase of 550 million this year.

In addition to these commitments, this government is securing our borders and taking back our streets.

• The new Border Security Command will smash the organised criminal gangs by deploying 100 new NCA officers and increasing cooperation with European intelligence agencies and police forces.
• Smashing gangs and boosting the processing of asylum claims forms a crucial part of the governments plan to cut asylum support costs by more than 4bn over the next 2 years compared to the previous governments spending trajectory.
• The Home Office settlement will put us on track to start delivering the manifesto pledge to boost visible neighbourhood policing with 13,000 more neighbourhood officers and PCSOs.

Protecting working people and living standards

While fixing the inheritance requires tough decisions, the Chancellor has committed to protecting the living standards of working people. The decisions taken by the Chancellor to rebuild public finances enable the government to deliver on its pledge to not increase National Insurance, VAT, or Income Tax on working people, meaning they will not see higher taxes in their payslip. In addition:

• The Chancellor has made the decision to protect working people from being dragged into higher tax brackets by confirming that Income Tax and National Insurance Contributions thresholds will be unfrozen from 2028-29 onwards.
• The National Living Wage will increase from 11.44 to 12.21 an hour from April 2025, which means a pay boost for 3 million workers. The 6.7% increase worth 1,400 a year for a full-time worker is a significant move towards delivering a genuine living wage. The National Minimum Wage for 18 to 20-year-olds will also rise from 8.60 to 10.00 an hour.
• The Chancellor is also protecting motorists by freezing fuel duty for one year and extending the temporary 5p cut to 22 March 2026 a tax cut worth 3 billion. This will save the average car driver 59, vans 126 and Heavy Goods Vehicles 1,079 next year.
• To support the take-up of zero emission cars, Vehicle Excise Duty (VED) First Year Rates (FYRs) are changing from 2025-26. Rates for zero emission cars will be frozen at 10 until 2029-30 while rates for hybrid and petrol/diesel cars will rise from 1 April 2025.
• The weekly earnings limit for Carers Allowance will be increased to 16 hours at the National Living Wage, worth an additional 45 a week from April next year, making over 60,000 carers eligible for support, and helping carers to balance work and caring responsibilities. This is the largest ever increase to the earnings limit and provides certainty for carers with a commitment that the earnings limit will increase with the National Living Wage in the future.
• To help ensure pensioners are protected in their retirement, the Budget will also confirm a 4.1% increase to the basic and new State Pension as well as the standard minimum guarantee for Pension Credit, from April next year.
• Over 12 million pensioners will benefit from this as the full new State Pension will rise from 221.20 to 230.25 a week, providing an additional 470 a year, while the full basic State Pension will increase from 169.50 to 176.45 per week, worth an extra 360 annually.
• The Pension Credit Standard Minimum Guarantee will also increase by 4.1% from April 2025, meaning an annual increase of 465 in 2025-26 in the single pensioner guarantee and 710 in the couple guarantee.
• The administration of Pension Credit and Housing Benefit will be brought together for new claimants from 2026. This is two years earlier than previously planned, and will support more people to receive the benefits that they are entitled to.
• In addition, working-age benefits and the Additional State Pension will rise by 1.7% in April 2025, in line with inflation. This increase will see around 5.7 million families on Universal Credit gain an average of 150 annually.

Rebuilding Britain

This government will not make a return to austerity and will instead boost investment to rebuild Britain by investing in the fabric of the country, as well as supporting the industries of the future. This will go towards rebuilding our schools, hospitals and roads, turbocharging the delivery of 1.5 million homes, and unlocking long-term economic growth.

This comes on top of action already taken under the governments growth mission including establishing the National Wealth Fund, publishing the Industrial Strategy green paper, and hosting the International Investment Summit.

• The government is exceeding its manifesto commitment to fix an extra 1 million potholes per year, with an additional 500 million for local road maintenance in 2025-26 an almost 50% increase on the commitment made by the previous government for the current financial year.
• This brings the total amount dedicated to fixing the roads in England over the next year to nearly 1.6 billion.
• This government is growing day-to-day spending at an average of 2.0% per year in real terms between 2023-24 and 2029-30
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