Budget 2024: 10 nasty surprises from council tax alarm to inflation warning and WASPI snub

Rachel Reeves has revealed the first Labour Budget in nearly 15 years – but there are some nasty details included.

The Chancellor announced billions of pounds to rescue the NHS as she vowed to get our public services back on their feat. But it means a massive £40billion in tax rises as she scrambles to turn around the dire state of the public finances left behind by the Conservatives.

While the Budget is jam-packed with announcements, many areas have been left behind including compensation for Waspi women and bold action to tackle child poverty. The Office for Budget Responsibility (OBR), which produces analysis and forecasts to go alongside the Budget, also had some gloomy warnings about inflation and the pace of growth for the economy.

The Mirror has trawled through the documents and collated some of the nasty Budget details.

1. Warning of council tax rises

Experts have warned that struggling local authorities may be forced to increase council tax. Ms Reeves announced a £1.3billion boost for town halls to ease pressure on struggling councils.

But Cllr Tim Oliver, chairman of the County Councils Network, said the rise in the National Living Wage will cause a headache for leaders. He said he welcomed measures including funding for special educational needs, the Household Support Fund and core funding.

But he went on: “However this funding does not eradicate councils’ funding gap, and local authorities will incur significant additional expense due to the increase in the National Living Wage. Therefore, councils will have little choice but to raise council tax and still will need to take difficult decisions over services to balance their budgets. We now await December’s local government settlement to set out how this funding will be distributed.”

2. ‘Historic high’ tax burden

The overall tax burden in the UK is due to increase to an “historic high” in 2027/28. It is forecast to rise from the equivalent of 36.4% of GDP (gross domestic product, or the total value of the economy) in 2024/25, to a record high of 38.3% in 2027/28, according to the OBR.

This is 5.2 percentage points above the pre-pandemic level of 33.1% in 2019/20. The level is forecast to then fall slightly in 2028/29 to 38.2%.

The increase is driven “mainly by personal taxes”, including the impact of changes in employer rates of national insurance, and “capital taxes”, reflecting the likely path of equity and property prices, the OBR said. Comparable data showing the overall UK tax burden or “tax take” as a share of GDP begins in 1948.

3. Inflation could go up

The Office for Budget Responsibility (OBR) documents say inflation could pick up to an average of 2.6% in 2025 – above the Bank of England target of 2%. This is significantly above the 1.5% rate previously predicted.

This is “partly due to the direct and indirect impact of Budget measures”, it says. But the documents warn there is “significant uncertainty” due to the impacts of the war in Ukraine and the conflict in the Middle East

4. No help for universities

There were no proposals in the Budget to address significant financial concerns facing universities as a result of frozen tuition fees paid by domestic students and a drop in overseas students.

Jo Grady, general secretary of the University and College Union, said: “Today’s Budget is thin gruel for those working in universities. Employer national insurance rises will hit the sector hard when higher education is already on its knees.

“Universities are crying out for increased public funding to secure their future as Britain’s last world-leading sector, yet the Chancellor failed to deliver. There will be no decade of national renewal if the Government’s approach to universities continues to be one of de facto disinvestment.”

5. Fears over farming and flood defences

While the Environment Department’s overall funding will rise slightly in real terms over this year and next, there is a slight reduction in its budget for day-to-day spending, and officials have warned the farming and flood defences budgets faced £600million of “funding pressures” – effectively unfunded spending commitments.

Elliot Chapman-Jones, head of public affairs for The Wildlife Trusts, said the real-terms budget for farming was falling, and around £3.1 billion was needed for nature-friendly farming in England alone. He added: “Ultimately, there is a monumental gap between current funding and what is needed to reverse wildlife declines, clean up rivers and significantly reduce the use of chemicals on farms.”

Country Land and Business Association’s (CLA) president Victoria Vyvyan said the decision to freeze the budget at the same level since 2014 would hit hard-pressed farmers, and the accelerated move from the old system of payments would be damaging to investment in farming.

6. Growth of economy to slow down

The economy is set to grow faster than expected this year and next but then suffer a slowdown, the Office for Budget Responsibility predicted. The independent body said policies in the Budget would deliver a “temporarily boost”, with growth revised up to 1.1% in 2024 and 2% next year. However, it then tails off to just 1.5% in 2027, leaving the size of the economy “largely unchanged in five years”.

Richard Hughes, chair of the OBR, said the government’s promised investment in infrastructure spending could take eight to 10 years to feed through to growth figures. “It takes time for that public investment to have an impact,” he said. The OBR also warned that the hike in employers’ national insurance risked feeding through to higher prices as companies pass the cost on, and lower wage growth.

7. No compensation for Waspi women

Ms Reeves sparked fury by failing to commit to compensation for 3.6million WASPI women. In March a bombshell report by the Parliamentary and Health Service Ombudsman recommended payouts of £1,000 to £2,995 – costing taxpayers between £3.5billion and £10billion. But the Government is yet to say what it will do.

Hundreds of protesters gathered outside Parliament as Ms Reeves delivered the Budget. The scandal affects women born in the 1950s who weren’t properly informed that the state pension age went up.

It left thousands in poverty as they couldn’t plan for their future. WASPI chairwoman Angela Madden said: “With one affected woman dying every 13 minutes, we cannot continue to be patient. There are hundreds of MPs from across the House backing fair and fast compensation, now Ministers must deliver.”

8. Foreign aid cuts

Campaigners and experts have hit out at the Chancellor for failing to increase foreign aid in her Budget. In 2023, the UK provided £15.4 billion of Official Development Assistance (ODA) – a ratio of 0.58% of Gross National Income, according to an official document on provisional spending. In the 2024 Budget, £13.3billion has been provided, enabling the UK to spend 0.5% of Gross National Income.

International Development Committee Chair Sarah Champion said: “It is disappointing the Government has decided to be bound by (Rishi) Sunak’s unachievable fiscal rules regarding foreign aid spend.” Kate Munro, Action Against Hunger UK’s Head of Advocacy, said: “Cuts to the UK’s overseas aid spending will cost lives, at a time when life-threatening levels of hunger and malnutrition are rising globally.”

Hannah Bond, Co-CEO of ActionAid UK said: “We are profoundly disappointed that the Chancellor has chosen not to uplift the Official Development Assistance (ODA) budget in the Autumn statement today. For a government that came to power pledging to reset its global relationships and place tackling climate change at the core of its foreign policy, this statement is an indication it plans to do anything but. “

9. Poverty plan ‘kicked down road’

Financial experts have accused the Chancellor of failing to address high levels of poverty across the country. Ms Reeves was under pressure to scrap the Tories’ two-child benefit limit but she insisted she did not have the money – despite finding money for other pledges.

Mike Brewer, interim chief executive at the Resolution Foundation, said: “While the Chancellor has confronted Britain’s austerity challenge, she has kicked the can down the road on Britain’s equally pressing poverty challenge until next Spring at the earliest. A failure to reverse damaging welfare cuts could see over 200,000 more children affected by the two-child limit.”

In its snap Budget analysis, the independent think tank questioned how Ms Reeves had managed to find £3billion to extend Fuel Duty cuts by a year yet had not found the money to get rid of the two-child limit and the benefit cap, or to unfreeze the Local Housing Allowance. The Foundation’s analysis shows that an additional 63,000 children will be affected by the two-child limit between now and April 2025 and, were it to remain in place, an additional 213,000 children would become affected between now and April 2026.

10. Was the £22billion black hole true?

When Labour was first elected to power, it discovered a £22billion black hole in the public finances after ordering an audit at the Treasury. Alongside Wednesday’s Budget, the OBR has today published a review on the figure – and has indeed backed up the claim that there were significant shortfalls.

Its review found that the former Tory government knew about a £9.5billion black hole in departments’ budgets but failed to share it with the OBR. If it had known about this, the OBR said it would have made a “materially different judgement” on what it expected each departments day-to-day spending would be.

The OBR said it cannot say exactly how much higher it would have estimated departments’ spending to be as it said discussions would have happened differently if it had known about the £9.5billion in spending pressures But it added that there would have been “materially higher” forecasts about departments’ budget day-to-day running costs.

The OBR added that Ms Reeves’s £23billion addition to department’s day-to-day spending pot represented a combination of filling the £9.5billion gap and cover new policies announced since March.