Rachel Reeves guarantees ‘extra kilos in pockets’ in Budget to ‘rebuild Britain’

Rachel Reeves will promise more “pounds in pockets” as she vows to use her first Budget to “rebuild Britain” from the mess left behind by the Tories.

The Chancellor will spell out her plans to fix the NHS and protect working people from being clobbered by tax hikes in a highly-anticipated statement to MPs. Evoking the spirit of Clement Attlee’s post-war Government, Ms Reeves will say it falls to Labour once more to remake the country from the rubble by rebuilding public services.

But she will admit it means difficult choices, with up to £40billion in tax rises and spending cuts expected to balance the books.

On the eve of Labour’s first Budget in almost 15 years, Ms Reeves also confirmed a pay rise for millions of low-paid workers with a 6.5% hike to the national minimum wage from April 2025. It will mean the national minimum wage for over 21s will increase from £11.44 to £12.21 an hour – a boost of £1,400 a year for a full-time worker.

For those under 21, the minimum wage will increase from £8.60 to £10.00 – a hike of £1.40 an hour and the largest increase on record. The Treasury said the changes will impact 3.5million workers in total and marks the “first step” in creating a single adult wage rate.

The Chancellor is also expected to pump billions of pounds into the NHS to meet the party’s pledge to bring down waiting lists after years of neglect. The Government has already confirmed £1.5billion will be invested in surgical hubs and scanners to help free up capacity – with an extra £70million for radiotherapy machines.

Ms Reeves will set out more cash for the crisis-hit health service today to meet Labour’s manifesto pledge to deliver two million extra appointments a year to tackle waiting lists which have ballooned to over 7.6million.

The Chancellor will say: “In 1945, it was the Labour Party that rebuilt our country out of the rubble of the Second World War. In 1964, it was the Labour Party that rebuilt Britain with the white heat of technology.

“And in 1997, it was the Labour Party that rebuilt our schools and hospitals. Today, it falls to this Labour Party, this Labour government, to rebuild Britain once again.”

Ms Reeves will say there are no shortcuts to fixing the dire inheritance left behind by the Tories but will offer hope to Brits exhausted by doom and gloom. “My belief in Britain burns brighter than ever. And the prize on offer to today is immense,” she will say.

“More pounds in people’s pockets. An NHS that is there when you need it. An economy that is growing, creating wealth and opportunity for all. Because that is the only way to improve living standards. And the only way to drive economic growth is to invest, invest, invest. There are no shortcuts. To deliver that investment we must restore economic stability.”

The Chancellor will tweak debt rules she inherited from the Tories to free up around £50billion, which could be spent on major infrastructure projects, such as schools, hospitals and railways. But there will be tough choices, such as axing the winter fuel allowance for millions of pensioners.

Keir Starmer told the Cabinet yesterday that “politics is about choices” and that the Budget will show “we are choosing to fix the NHS, rebuild Britain and protect the payslips of working people”, a Labour spokesperson said.

The party pledged not to raise taxes on income tax, VAT or national insurance for “working people” in its manifesto. But ministers have come under pressure to spell out who that covers amid fears businesses could be clobbered.

The Budget is expected to include increases to National Insurance contributions for employers, while wealthier Brits could see hikes to inheritance tax and capital gains – and an end to tax breaks for private schools. There have also been indications that income tax thresholds could be frozen beyond the planned date of 2028, forcing more people into paying higher rates.

Ms Reeves last night sought to focus on the boost to the minimum wage, saying: “This Government promised a genuine living wage for working people. This pay boost for millions of workers is a significant step towards delivering on that promise.”

Deputy PM Angela Rayner added: “A proper day’s work deserves a proper day’s pay. Our changes will see a pay boost that will help millions of lower earners to cover the essentials as well as providing the biggest increase for 18–20-year-olds on record.”

TUC General Secretary Paul Nowak said: “The Government is delivering on its promise to make work pay. This increase will make a real difference to the lowest paid in this country at a time when rents, bills and mortgages are high.”

But the Federation of Small Businesses (FSB) said smaller employers needed help to meet extra costs. Tina McKenzie, policy chairwoman at the FSB, said: “Other business costs also remain high at a time when many small businesses have still not rebuilt the reserves they had to use to get them through the worst periods of the pandemic.

“Decisive action from the Chancellor to support small firms when it comes to business rates would be welcome, releasing money for jobs and investment rather than taking it away in what is essentially an analogue tax in the digital age.”