UK Treasury chief announces $52B in tax increases, major NHS funding boost

LONDON

The UK Treasury chief on Wednesday unveiled Labour’s fiscal strategy for the coming years, committing to tax increases aimed at raising £40 billion ($52 billion) annually and pledging record  investment in the National Health Service (NHS).

This budget marks the first Labour Autumn Statement since 2009 and sets out a combination of tax reforms and substantial spending increases intended to bolster public services while addressing the nation’s debt.

A central feature of Chancellor of the Exchequer Rachel Reeves’ budget is the rise in National Insurance contributions for employers, which will increase by 1.2 percentage points to 15% beginning April 2025.

Reeves expects this measure alone to raise £25 billion per year for the government.

In a move that aims to protect low-income earners, Reeves confirmed that the current freeze on income tax and National Insurance thresholds will end in 2028.

“This is about avoiding undue pressure on working people,” she told the House of Commons.

Other tax reforms include an increase in Capital Gains Tax and the imposition of VAT on private school fees starting in January, a long-debated measure within Labour ranks.

Fuel duty will remain frozen next year, a decision that will keep costs stable for motorists amid broader economic pressures.

In an effort to support low-wage earners, Reeves reiterated yesterday’s announcement that the minimum wage will rise in April.

She also pledged to cut duties on draught beer, with a promise of “a penny off pints at the pubs” to support local pubs and encourage social gatherings.

Among the key spending promises in the Autumn Statement, Reeves outlined a £22.6 billion increase in the NHS’s day-to-day budget, alongside £5 billion earmarked for housing investment.

This NHS funding package includes £1 billion specifically targeted at tackling a backlog of necessary repairs and upgrades across NHS facilities, aiming to expand capacity for thousands of additional procedures.

“This funding is dedicated to restoring NHS infrastructure and addressing years of underinvestment,” Reeves stated.

Reeves also announced an additional £1.5 billion for new hospital beds and over a million more diagnostic tests, along with new surgical hubs and diagnostic centers to address extensive waiting lists.

She expressed confidence that these measures would improve treatment times and allow the government to work toward its goal of 18-week maximum waiting times for hospital treatments, promising to deliver 40,000 extra hospital appointments per week.

Reeves has not only emphasized her commitment to reviving public services but has also underscored Labour’s pledge to modernize and strengthen the NHS.

“With this record injection of funding and the reforms we are implementing, we are determined to make sure no one waits longer than necessary for the care they deserve,” said Reeves.

• Labour
• National Health Service (NHS).
• Rachel Reeves
• UK Treasury chief