Labour delivers first Budget in 14 years, first delivered by a woman

Rachel Reeves delivered the Autumn Budget on 30 October 2024, Labour's first Budget in 14 years and the first ever delivered by a woman, according to Full Fact¹. The Chancellor of the Exchequer was also the first woman to deliver the Budget, the fact-checking organisation noted¹. Outgoing Conservative leader Rishi Sunak responded for the Opposition¹.

The single biggest tax-raising measure was an increase in employers' National Insurance contributions (NICs), which the Office for Budget Responsibility (OBR) expects to raise £25.7 billion a year by 2029/30, before accounting for the indirect effects of the policy¹. The changes include a 1.2 percentage point rate increase, a reduction in the threshold at which employers begin paying NICs from £9,100 to £5,000 a year, and an increase in the Employment Allowance, the relief smaller employers can claim on their NICs liabilities¹. The OBR forecasts that approximately three-quarters of the employer NICs will be passed on to employees through lower real wages¹. It also says the passing-on is partly responsible for what it forecasts will be a "sharp" slowdown in real household disposable income growth in 2026/27 and 2027/28¹.

Overall, taxes are set to increase by £40 billion¹. The Institute for Fiscal Studies said the Budget will see a 1.21% increase in taxes as a percentage of GDP by the end of the forecast period, while the Spring Budget in 1993 saw a 1.45% rise¹. In cash terms, the OBR told Full Fact the overall tax increase is higher than in 1993, when Conservative chancellor Norman Lamont raised taxes by £38.5 billion¹.

On the £22 billion figure, the OBR review found the Treasury knew in February about pressure on departments' budgets for 2024/25 amounting to £9.5 billion above what was known to the OBR at the time of the Spring Budget¹. It added that "the size of the reserve to meet those pressures was reduced by £3.5 billion", information not shared with the OBR¹. The Treasury audit published in July found the forecast overspend on departmental spending in 2024/25 was expected to be "£21.9 billion above the resource departmental expenditure limit (RDEL) totals set by the Treasury" in the 2024 Spring Budget¹.

On bus fares, the £2 cap on single bus fares will be replaced with a £3 cap for the whole of 2025¹. Full Fact notes that before the general election the £2 cap in England had been due to end in December, but the Conservatives had pledged in their manifesto to extend it¹.

The OBR forecasts real GDP cumulative growth from 2024 to 2028 of 7.1% under the Budget, down from 7.6% in March's forecast¹. It forecasts growth of 1.1% this year, up 0.4 percentage points, and 2% in 2025, up 0.1 percentage points¹. Growth in 2026 is forecast at 1.8%, down 0.2 percentage points, and 1.5% in 2027 and 2028, down 0.3 and 0.2 percentage points respectively¹.

Why it matters for households

The employer NICs changes take effect from the Budget, and the OBR expects most of the cost to reach employees through lower real wages rather than higher tax on payslips¹. The OBR links the passing-on partly to a forecast "sharp" slowdown in real household disposable income growth in 2026/27 and 2027/28¹. The bus fare change means the £2 cap on single fares in England becomes a £3 cap for the whole of 2025¹. The Budget's tax rises total £40 billion overall¹.

What happens next

The OBR forecasts the net economic effect of Budget measures on the level of output "begins to turn positive from 2032-33 onwards"¹. It also says there is a roughly one-in-five chance that annual GDP growth in 2025 is either negative or above four per cent¹. Full Fact said it had contacted both Labour and Conservatives for comment and would update its article if it received a response¹.