Rachel Reeves faced an extraordinary day in Parliament as her Budget plans were leaked before she even rose to speak.
The Chancellor, looking pale and scrambling, had hoped to unveil a carefully crafted package, but the early release by the Office for Budget Responsibility (OBR) threw everything into disarray.
The leak revealed the scale of tax increases and spending promises, leaving Ms Reeves under immediate scrutiny from MPs and the media alike.
A Tax Burden Set to Skyrocket
At the heart of the uproar is a projected £30 billion annual increase in taxes by 2030-31.
A major chunk—£12.7 billion—will come from extending the income tax threshold freeze for another three years, pulling a quarter of the workforce into higher or top rate tax bands.
This is a significant jump from the 15% affected when the freeze was first introduced in 2021, marking a record high for the UK’s tax burden.
Ms Reeves defended the move, telling MPs that everyone must “contribute,” despite having pledged just a year ago that she would not prolong the freeze because it unfairly hits working people.
Critics Call It a Budget for Benefits Street
Opposition voices were quick to pounce.
Tory leader Kemi Badenoch described the package as a “Budget for benefits,” pointing out the government’s generosity on welfare while workers, pensioners, and savers face new taxes.
The Chancellor’s promises, she said, were being paid for by ordinary people, echoing scenes reminiscent of the Channel 4 show Benefits Street.
Leaked Details Spark Frenzy
Images from Westminster showed Ms Reeves being handed a phone by minister Torsten Bell moments before PMQs, alerting her to the leak.
She called it a “serious error” on the part of the OBR, who later apologized and launched an investigation.
Historical parallels were drawn to 1947, when Labour Chancellor Hugh Dalton resigned after a pre-release of his Budget details.
Big Wins for Families, but Costs Mount
Despite the criticism, some measures were aimed at easing household pressures.
The two-child benefit cap will be scrapped, potentially adding £14,000 for large families.
Around 560,000 families are set to see extra cash totaling £3 billion per year.
Fuel duty will be frozen for five months, though gradual increases are planned afterward.
Other key measures include:
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Cutting “salary sacrifice” tax reliefs on pensions, raising £4.7 billion.
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Increasing tax on dividends, property, and savings by 2 percentage points (£2.1 billion).
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Introducing a mileage-based charge for EVs and hybrids from 2028 (£1.4 billion).
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A new gambling tax excluding horse racing (£1.1 billion).
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A “mansion tax” up to £7,500 on properties over £2 million (£400 million).
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Reductions in ISA limits from £20,000 to £12,000, with exceptions for over-65s.
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Compulsory ID cards projected to cost £1.8 billion over three years.
Welfare and Spending Forecasts Surge
The OBR forecasts welfare spending rising by £16 billion more than expected by 2030-31, and health and disability benefits increasing from £83.1 billion in 2025-26 to £103.6 billion in 2029-30.
Ms Reeves also froze fuel duty for five months, though it will rise in stages after September.
Market Reactions and Economic Warnings
The leak caused immediate ripples in financial markets.
The pound dipped against the dollar and euro, and long-dated gilt yields rose, reflecting concerns over borrowing costs.
While the OBR slightly upgraded growth forecasts for this year to 1.5%, productivity trends were downgraded, pointing to slower long-term improvements. Inflation is expected to remain above target until 2027.
Addressing the Tax Fairness Debate
Ms Reeves defended higher taxes on property, savings, and dividend income, arguing the system unfairly benefits landlords and investors over workers.
She insisted 90% of taxpayers would still pay no tax on their savings, framing the changes as a move toward fairness.
Political Fallout and Party Lines
Tory critics framed the Budget as a “smorgasbord of misery,” while Labour backbenchers praised moves like scrapping the two-child benefit cap.
Cabinet minister Darren Jones admitted the tax threshold freeze effectively acts as a tax hike for those whose wages rise above it, highlighting the delicate balancing act between fairness and political pressure.
Bigger Picture: Debt, Deficits, and Long-Term Strategy
The Chancellor insisted her decisions were necessary to strengthen the economy and tackle cost-of-living pressures.
She vowed to reduce government debt costs and build buffers against future shocks, all while promising a “biggest drive for growth in a generation.”
Analysts warned that the combination of record tax hikes and spending increases could strain markets if the plan is not seen as credible.
A Budget of Contradictions
In the end, the 2025 Budget represents a striking mix: sweeping tax rises, generous benefits expansions, and ambitious economic promises.
Ms Reeves now faces the twin challenges of placating backbench MPs while maintaining market confidence, all under the microscope of a public and press keenly aware of the stakes.
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