Subscribe to our newsletter to receive business tips, learn about new funding programmes, join upcoming events, take e-learning courses, and more.
Take the first step to successfully starting and growing your business.
Join for free)
Posted: Mon 29th Jul 2024
The new Labour government will deliver its first Budget on 30 October, Rachel Reeves has announced.
The chancellor revealed the date while delivering a statement in which she said Labour has inherited £22bn of unfunded spending commitments for 2024-25 from the previous Conservative government.
A Treasury audit commissioned by Reeves says the unfunded commitments include the Rwanda migration scheme, the Advanced British Standard which was due to replace A-levels and the New Hospital Programme.
Going ahead with the schemes, Reeves said, "would have meant an 25% increase in the government's financing needs this year, pushing gilt issuance further into record highs outside of the pandemic".
To "reduce that pressure on the public finances by £5.5bn this year and over £8bn next year", the chancellor said the Rwanda and Advanced British Standard schemes have been cancelled, alongside other projects including the Restoring Your Railway programme (individual cases can be reviewed), the A303 Stonehenge tunnel, adult social care charging reforms and winter fuel payments for some pensioners.
Also being scrapped is the Investment Opportunity Fund, a scheme announced in the previous government's 2023 Autumn Statement to finance projects in investment zones and freeports. The Labour government says no projects have been funded.
Previous chancellor Jeremy Hunt described Reeves' claims as "spurious" and said she had access to the Office for Budget Responsibility (OBR) records which would have provided her with all the information before Labour entered government.
But a letter from Richard Hughes, the chair of the OBR, to the Treasury Select Committee said they only became aware of the spending pressures last week.
To give consumers and businesses notice of tax and spending changes, the government said it will deliver one major fiscal event a year.
Its first Budget will be on 30 October this year, with Reeves saying the statement, announced alongside a forecast from the Office of Budget Responsibility, will "involve taking difficult decisions to meet our fiscal rules across spending, welfare and tax".
She did, however, confirm Labour's General Election manifesto commitment that the government will not increase National Insurance, the basic, higher, or additional rates of income rax, or VAT for the duration of the current Parliament.
The chancellor also announced a multi-year spending review for government departments. She said:
"The review will set departmental budgets for at least three years, providing the long-term certainty that has been lacking for too long.
"As part of that process, final budgets for this year and budgets for next year, 2025-26, will be set alongside the Budget on 30th October."
Emma Jones, founder of Enterprise Nation, said:
"Chancellor Rachel Reeves has set the tone for the foreseeable future and we can expect to see more of these cost cutting decisions revealed in the Autumn Budget. It can't have gone unnoticed that the speech adds even more urgency to speed up the growth agenda.
"Amidst all the fiscal doom and gloom, the chancellor does have some options.
"If the government is serious about creating economic growth and maintaining the highest rate of economic growth in the G7, it must look to tried and tested business support programmes developed by the private sector to support the growing number of entrepreneurs and small businesses we now have in every region of the UK.
"Small businesses create jobs and contribute to their local economy and communities. Their support and protection should feature highly on a growth agenda."
