Chancellor’s budget: Largest Tax Hikes Since 1970 Fuel Increased Spending on Social Programs
Westminster - Chancellor’s latest Budget hinges on a significant increase in taxation,marking the largest set of tax rises in a single parliament since at least 1970,according to the Institute for Fiscal Studies. The plan aims to fund what Labor figures are calling “good Labour things,” most notably the abolition of the two-child limit on the child element in Universal Credit.
The Budget document states the removal of this limit will lift an estimated 450,000 children out of poverty, a figure projected to rise to around 550,000 when combined with other measures like the expansion of free school meals. The declaration was met with eager support from Labour MPs in the House of Commons, many of whom have long campaigned for the change since the last general election.
However, the decision isn’t without internal debate within the Labour party. While popular with many,opinion polls previously indicated public support for maintaining the two-child cap. This highlights the delicate balancing act the Chancellor faces in appealing to multiple audiences.
Beyond domestic political considerations, the Budget is designed to maintain credibility with financial markets, ensuring continued borrowing at affordable rates. It also seeks to improve the government’s standing with the wider electorate, currently facing low approval ratings, and appease Labour MPs acutely aware of the party’s current polling position.
the government asserts that all but the wealthiest 10% of households will benefit from the Budget’s measures by the end of the decade,emphasizing a progressive approach to fiscal policy. downing street is hoping the positive reaction from Labour backbenchers during the Chancellor’s address will continue in the coming months, potentially providing the Prime Minister and Chancellor with valuable time.
To bolster the plan’s stability, the Chancellor has built more “headroom” into her financial forecasts, providing a buffer against unforeseen economic events. furthermore, the Office for Budget Obligation (OBR) will now review the government’s adherence to its fiscal rules only once a year, rather than twice.
Rachel Reeves may also see a benefit in the OBR’s reduced publication schedule, as it halves the chance of a repeat of the pre-Budget leak that saw the Chancellor’s plans published 45 minutes before her official announcement in the Commons.
