Reeves gambles on £40bn tax increase in first Budget

Chancellor insists extra borrowing vital to ‘fix broken Britain'

- DAVID MADDOX

Rachel Reeves gambled on a £40bn tax rise in yesterday’s historic Budget in a bid to boost public services and grow the economy. She told the House of Commons that the increase – a record sum, equalled only by Norman Lamont in 1993 – coupled with a massive £32bn in extra borrowing was vital to “fix broken Britain”.

Ms Reeves, the first woman in the 803-year existence of the office of chancellor of the Exchequer, delivered the first Labour Budget in 14 years to cheers from her own benches, as she blamed a “toxic Tory legacy” for the measures she was forced to take. A confident-looking Reeves mocked opponents during a 77-minute speech that included swipes at Rishi Sunak’s fondness for private jets and at her predecessor Kwasi Kwarteng describing his notorious mini-Budget as “not perfect”.

But on the serious detail, she said: “I have made my choices. The responsible choices. To restore stability to our country. To protect working people.”

She announced a string of measures targeting the wealthy and the middle class, including:

Employers’ national insurance contributions to rise from 13.8 per cent to 15 per cent

Capital gains tax increased from 10 per cent to 18 per cent

Non-dom status abolished and replaced with a residency tax Inheritance tax expanded to include pensions and farms

Stamp duty raised to 5 per cent for existing homeowners

Ms Reeves said the tax rises will help to pay for an extra £25bn cash injection for the NHS, part of an overall spending increase of £70bn.