The Chancellor will finally reveal her plans after months of speculation
Rachel Reeves is set to announce her tax and spending plans as she delivers her second budget since Labour came to power. The Chancellor will present her plans to plug a big black hole in the nation’s public finances with a ‘smorgasbord’ of tax rises expected.
The government has already announced an increase in the minimum wage and the option for mayors to introduce a tourist tax. Pre-packaged milkshakes and lattes will also be subject to the sugar tax, the health secretary announced on Tuesday (November 25).
The two-child benefit cap is widely expected to be lifted – following pressure from Labour backbenchers – at a cost of £3bn a year. There are also rumours that a ‘mansion tax’ could be introduced along with a new national property tax, replacing stamp duty.
The Chancellor will deliver the budget in the House of Commons after Prime Minister’s Questions at around 12.30pm this afternoon (November 26). In a video published last night, she said that the government had started to see results in the past year with “wages rising faster than inflation, hospital waiting lists coming down, and our economy growing faster and stronger than people expected”.
“But I know there is more to do,” she said. “I know that the cost of living is still bearing down on family finances, I know that people feel frustrated at the pace of change, or angry at the unfairness in our economy.
“I have to be honest that the damage done from austerity, a chaotic Brexit and the pandemic were worse than we thought.
“But I’m not going to duck those challenges, and nor will I accept that our past must define our future. It doesn’t have to.”
She described the budget as being for “the British people” and said the government would work with them to “build a fairer, stronger and more secure Britain”. The Chancellor also insisted she will use this budget to introduce measures to tackle the cost-of-living crisis.
‘How dire have things become?’
Responding to the news in the budget of changes to the social security system and schemes such as Motability, Mikey Erhardt, Policy Lead at Disability Rights UK said: “We are living in an era of sickness caused by political choices. Many are getting more ill under the weight of poor working conditions, inadequate incomes, precarious housing and overstretched health and social care services. The fault for this lies squarely at the feet of successive governments who have chosen profit over people.
“How dire have things become? We don’t even feel able to celebrate the end of the punitive two-child benefit cap because it feels like just a drop in the ocean. Ministers have been dragged kicking and screaming to this point, yet at the same time, they’re penalising those in society who earn the least by bringing them into taxation.”
‘Smorgasbord of misery’
Kemi Badenoch said Rachel Reeves had raised taxes to pay for welfare in an announcement she termed a “Budget for Benefits Street”.
The Conservative leader cited the name of a Channel 4 show from the 2010s which focused on life on a street in Birmingham as she said workers would be paying for handouts.
Mrs Badenoch said the package of measures were a “smorgasbord of misery” from the Chancellor.
She said: “Today she has announced a new tax raid of £26 billion. They’re all cheering. Household income is down. Spending policies in this Budget increase borrowing in every year. That smorgasbord of misery we have heard from her can be summed up in one sentence. Labour are hiking taxes to pay for welfare. This is a Budget for Benefits Street, paid for by working people.
“This Budget increases benefits for 560,000 families by an average of £5,000. They are hiking taxes on workers, pensioners and savers to pay for handouts to keep their backbenchers quiet.”
Mrs Badenoch was heckled by Labour backbencher Jonathan Brash (Hartlepool), who shouted the Government was “taking children out of poverty”.
The Tory leader continued: “They can chunter all they like. These are the same backbenchers who cheered last year when she taxed jobs and left more than 100,000 people without an income.”
Councils ‘rightly anxious’
Coun Kevin Bentley, Senior Vice Chairman of the Local Government Association (LGA), which represents councils across England and Wales, said: “Scrutiny of today’s Budget will focus on decisions around national taxation. However, while people rightly care about tax levels and the cost of living, they also care deeply about the local services they rely on every day.
“Councils work tirelessly to deliver on the ambitions of residents and are key to solving many of the challenges the Government is looking to address. However, local government finances remain under severe pressure with councils facing huge cost pressures in areas including adult social care, temporary accommodation, SEND, and home to school transport.
“The Government has acted on LGA calls to provide greater financial certainty and a simpler funding system, which are hugely important for councils. While funding levels have increased in recent years, councils will be rightly anxious that today’s Budget does not provide the increase in funding they desperately need to ensure their financial sustainability, protect services, support local communities, and address national priorities.
“We will be analysing today’s announcements in detail and publishing a full briefing in the coming days.”
‘Positive start’
Oldham MP Debbie Abrahams says the removal of the two-child benefit limit is ‘very welcome’. Together with the chair of the Education select committee, Ms Abrahams, who chairs the Work and Pensions committee, said the move is a ‘positive start’.
Together with Helen Hayes, Ms Abrahams said, “Removing the two-child limit is very welcome. It will almost immediately lift hundreds of thousands of children out of poverty and stop even more being drawn into it.
“The policy was directly linked to damaging the opportunities of a generation of children, who were dragged into poverty through no fault of their own. The fact that nearly three-quarters of children living in poverty are from working families is rarely said.
“Additional cash support to families with more than 2 children will make a direct and positive impact on their children’s wellbeing. However, many families will very quickly come up against the benefit cap which puts a maximum limit on the benefits a working-age household can receive.
“Cash support through the social security system is essential to alleviate poverty but the comprehensive Child Poverty Strategy needs to go much further and wider, involving all Government departments.
“Removal of the two-child limit is a positive start. We will keep watch on the what the Government proposes in its forthcoming Tackling Child Poverty Strategy.”
‘Total humiliation’
Conservative leader Kemi Badenoch said the budget was a ‘total humiliation’ for Rachel Reeves and that she hopes it will ‘be her last’, accusing the Chancellor of breaking promises by raising tax by £26bn. She said: “If she had any decency she would resign”.
Electric vehicles
Electric vehicle (EV) users will pay 3p per mile in a new tax, Rachel Reeves said. She told MPs: “I will ensure that drivers are taxed according to how much they drive and not just the type of car they own by introducing electric vehicle excise duty on electric cars.
“This will be payable each year alongside vehicle excise duty at 3p per mile for electric cars and 1.5p for plug-in hybrids, helping us to double road maintenance funding in England over the course of this Parliament.”
Additionally, £200 million will go towards the rollout of EV charging, Ms Reeves said, and the threshold for the expensive car supplement on EVs will increase to £50,000, which she said would save more than one million motorists £440 a year.
Energy bills
There will be a £150 cut to the average household energy bill from April next year, Rachel Reeves says. This will be done by scrapping ‘legacy’ costs off bills.
Fuel finder
New rules will mandate petrol forecourts to share real-time price rises through a new ‘fuel finder’. Rachel Reeves says this will empower drivers to find the cheapest fuel, call out rip offs and increase competition, saving the average household £40 a year.
State pension up
The state pension will go up by 4.8 pc as the Chancellor continues the long-standing ‘triple lock’ commitment. This is an increase of £440 per year for the basic state pension and an increase of £575 for the new state pension.
‘Fully funded, fully costed’
Rachel Reeves says that the removal of the two-child benefit cap is ‘fully funded, fully costed’. She says the move will lift 450,000 children out of poverty and says that, combined with other actions, the government is achieving t’he biggest reduction in child poverty since records began’.
Promise kept?
Rachel Reeves confirms that she will not be increasing National Insurance, income tax or VAT. This is was a manifesto pledge by Labour last year when the party promised not to raise taxes on working people. However, the Chancellor admitted earlier that that extending the freeze of national insurance and income tax thresholds at their current levels will affect working people.
She said: “I can confirm that I will not be increasing National Insurance, the basic, higher or additional rates of income tax or VAT. I have kept everyone’s contribution as low as possible through reforms to make our tax system stronger. Closing looopholes, ensuring that the wealthiest pay their share and building a tax system that is fairer for the future as our economy changes.”
Vaping tax
A vaping products duty is due to be announced in 2026 alongside plans for an increase in tobacco duty already announced last year and changes to the soft drinks industry levy announced yesterday by health secreraty Wes Streeting.
Capital gains tax relief
Capital gains tax relief on business sales made to employee ownership trusts will be reduced from 100% to 50%, the Chancellor has announced.
Two-child benefit cap lifted
Chancellor Rachel Reeves has confirmed the two-child benefit cap will be lifted, telling the Commons: “We on this side of the House do not believe that the solution to a broken welfare system is to punish the most vulnerable children.”
Gambling taxes up
Taxes are rising on remote gaming from 21% to 40%, and on online betting from 15% to 25%, while there are no changes for in-person gambling or horse-racing, and bingo duty is being abolished, Rachel Reeves has announced.
Salary sacrifice
Salary sacrifice into pensions above £2,000 will be taxed from 2029, Chancellor Rachel Reeves said. She told the Commons: “I am introducing a £2,000 cap on salary sacrifice into a pension, with contributions above that taxed in the same way as other employee pension contributions.
“That is a pragmatic step so that people, especially on low and middle incomes, can continue to use salary sacrifice for their pension without paying any more tax than they do now. And to give individuals and employers time to adjust to these new arrangements, these changes will come into effect in 2029.”
‘Mansion tax’
A ‘mansion tax’ will be introduced, affecting owners of less than the top 1 pc of proproperties, raising an extra £400m by 2031.
Rachel Reeves said: “From 2028, I am introducing the high-value council tax surcharge in England, an annual £2,500 charge for properties worth more than £2m, rising to £7,500 from properties worth more than £5m. This will be ocllected alongside council tax, levied on owners.”
Freezing tax thresholds
Rachel Reeves has said she is “asking everyone to make a contribution” by freezing income tax and national insurance thresholds at their current levels into the 2030s, as she acknowledged the move would break previous Labour promises because it “will affect working people”.
She said: “I am asking everyone to make a contribution but I can keep that contribution as low as possible because I will make further reforms to our tax system today to make it fairer and to ensure that the wealthiest contribute more to make it work.”
Motability
Rachel Reeves has announced reforms to the Motability scheme, which subsidises vehicles for people with disabilities. The Chancellor says that this will reduce generous taxpayer subsidies and remove luxury vehicles.
She said: “The motability scheme was set up to protect the most vulnerable not to subsidise the lease on a Mercedes Benz.”
Apprenticeships
The Chancellor has announced funding to make training for under-25 apprenticeships completely free for small and medium size enterprises. She has also announced £820m for the ‘youth guarantee’ over the next three years. She says that this will guarantee that every young person a place in college, an apprenticeship or personalised job support.
Welfare reforms
Rachel Reeves says her government will introduce more welfare reforms. She said: “The broken welfare system that we inherited wrote off millions of people as too sick to work and we will reform that system so that it is a system that does not count the cost of failure but one that protects people who cannot work and empowers those who can.”
Asylum hotels
The Chancellor reiterates that hotels housing asylum seekers will be ‘phased out’ completely, saving money for the taxpayer.
‘Getting debt down’
Rachel Reeves has said the Labour government is “getting debt down”. She told the Commons: “Despite the challenges we face on productivity, the path of our deficit reduction remains broadly the same as in the spring – public sector net borrowing is due to be £112.1 billion or 3.5% of GDP in 2026/27, 3.0% in 27/28, 2.6% in 28/29, 1.9% in 29/30 and 1.9% in 30/31 – ending at £67.2 billion, translating into an increase in the net cash requirement next year of £4.2 billion, taking the total to £133.3 billion.
“According to the IMF, we are due to reduce borrowing more over the rest of this Parliament than any other G7 economy. The Conservatives crashed the economy, we are protecting it. The Conservatives lost control of debt, we are getting debt down.”
The Chancellor also told MPs: “I’ve made my choices – not reckless borrowing, not dangerous cuts, but stability for our economy, security for the public finances, and security for family finances too.”
More nurses, more GPs
The Chancellor says that savings in the NHS will be reinvested into the care that people rely on, promising more nurses, more GPs, more appointments. She announces £300m of investment in technology to improve patient service and 250 new neighbourhood health centres ‘expanding more services into communities so that people can receive treatment outside of hospitals and get better, faster care where they live’. Over 100 of these will be delivered by 2030, the Chancellor says.
Further £4.9bn of cuts
The Chancellor says the government will deliver a further £4.9bn of ‘efficiencies’ by 2031, getting rid of Police and Crime Commissioners, cutting the cost of politics and local government and selling government assets ‘we no longer have any use for’.
Fewer OBR assessments
Chancellor Rachel Reeves has said she will ask the Office for Budget Responsibility to assess whether she is meeting her fiscal rules just once a year, in the autumn budget, rather than twice a year.
School libraries and playgrounds
Rachel Reeves says the government will provide £5m for libraries in secondary schools, building on £10m commitment to ensure every primary school has a school library within this Parliament. There will also be £18m to improve and upgrade playgrounds across England.
ISA changes
Rachel Reeves has announced that £8,000 of the £20,000 tax-free ISA allowance must be invested in stocks and shares, capping the annual cash ISA allowance at £12,000, except for those who are over 65.
She told MPs: “From April 2027, I will reform our Isa system, keeping the full £20,000 allowance while designating £8,000 of it exclusively for investment, with over-65s retaining the full cash allowance.
“And thanks to our changes to financial advice and guidance, banks will be able to guide savers to better choices for their hard-earned money.
“Over 50% of the Isa market – including Hargreaves Lansdown, HSBC, Lloyds, Vanguard and Barclays – have signed up to launch new online hubs to help people invest here in Britain.”
Northern Powerhouse Rail
Rachel Reeves has reiterated her commitment to Northern Powerhouse Rail which is expected to include a new line between Liverpool and Manchester and onto Yorkshire. However, the details of what the project will include are yet to be confirmed.
The Chancellor first committed to Northern Powerhouse Rail five months ago in the Spending Review. Since then, we’ve been waiting to find out what it will include. We were first told that it would be in the ‘coming weeks’ but now it’s ‘in the near future.
Read more here.
Borrowing down, headroom up
Chancellor Rachel Reeves has said that “borrowing will fall as a share of GDP in every year of this forecast” and the amount of headroom against the government’s targets will double to £21.7 billion, “meeting our stability rule and meeting it a year early”.
Salary-sacrifice pension charges
National Insurance will be charged on salary-sacrificed pension contributions above an annual £2,000 threshold from April 2029, raising £4.7bn, the Office for Budget Responsibility has revealed.
Pay per mile tax
Drivers of battery electric cars will be hit by a 3p per mile tax from April 2028, with the charge to rise annually with inflation, according to the documents published early by the Office for Budget Responsibility.
Growth forecasts upgraded
Rachel Reeves says the government has ‘defied the forecasts’. She refers to the OBR’s growth forecast which has been upgraded from 1 pc to 1.5 pc. However, the leak documents reveal that the forecasts have been downgraded for the following four years.
The Chancellor adds: “We beat the forecasts last year and we’ll beat them again.”
Key announcements leaked
Chancellor Rachel Reeves’ Autumn Budget plans have been confirmed following a leak to the OBR’s fiscal report. You can read the key changes that you need to know about, including increases to benefits, the minimum wage and taxes here.
‘Deeply disappointing’
Rachel Reeves begins the budget saying that the ‘breach’ by the OBR is ‘deeply disappointing and a serious error on their part’
‘Supreme discourtesy’
The government has been castigated for leaks in the media ahead of the budget over recent weeks. Deputy speaker Nusrat Ghani said: “For a number of weeks and yet again yesterday there have been extensive briefings to the media on the government’s fiscal policy and public finances. This disappointing trend in relation to budget briefings has been growing for a number of years under successive governments but appears to have reached an unprecedented high.”
She added: “Just a moment ago it seems the OBR analysis has also appeared online. This all falls short of standards that the House expects. The premature disclosure of the contents of the budget has always been regarded as a supreme discourtesy to this House and to all the democratically elected members, not to mention to Mr Speaker and to myself, the Chairman of Ways and Means.”
‘Utterly outrageous’
Shadow Chancellor Mel Stride says that the leak of the OBR foreceast could constitute a criminal act. He said: “This morning we have seen an unprecedented leak of the OBR’s economic and fiscal outlook report before the budget. This report contains market sensitive information. It is utterly outrageous that this has happened and this leak may indeed constitute a criminal act.”
OBR apologises
The Office for Budget Responsibility has apologised for the ‘technical error’ that led to its budget analysis being published early. In a statement, the OBR said:“We apologise for this technical error and have initiated an investigation into how this happened.”
A link to our Economic and fiscal outlook document went live on our website too early this morning. It has been removed.
We apologise for this technical error and have initiated an investigation into how this happened.
We will be reporting to our Oversight Board, the Treasury,…
— Office for Budget Responsibility (@OBR_UK) November 26, 2025
Debt up
Debt is set to rise from 95 pc of GDP this year to 96.1 pc by the end of the decade, according to Office for Budget Responsibility forecasts which were published early. The amount of headroom the government has against its borrowing rules will widen to £22bn in 2029-30, according to the latest forecast from the Office for Budget Responsibility, which is £12bn more than in March.
‘Mansion tax’ and fuel duty freeze
A high-value council tax surcharge on properties worth over £2m dubbed a ‘mansion tax’ is set to raise £0.4bn in 2029-30, according to the Office for Budget Responsibility. The documents which were accidentally published early also reveal that Rachel Reeves will retain the 5p cut in fuel duty until September 2026, when it will be reversed through a staggered approach.
Budget ‘leaked’
Extraordinarily, the Office for Budget Repsonsibility has accidentally published its analysis of the budget, which is normally published after the Chancellor delivers it, BEFORE Rachel Reeves has even risen to her feet. The link has now been removed.
MPs are referring to it as a ‘leak’. The OBR has apologised for the ‘technical error’, saying that an investigation has been initiated.
Two-child benefit cap lifted
The government’s independent spending watchdog the Office for Budget Responsibility has published its economic and fiscal document before Chancellor Rachel Reeves delivers her budget, despite normally releasing it afterwards by convention. The document reveals the two-child benefit cap is being removed at an estimated cost of £3 billion by 2029-30, accoridng to PA.
It also confirms the budget will extend the existing freezes to personal tax thresholds for another three years until 2030-31. The OBR’s forecast for economic growth this year is up from 1 pc to 1.5 pc but downgraded its forecasts for the following four years.
Starmer: ‘A Labour budget’
Keir Starmer begins Prime Minister’s Questions but describing today’s budget as ‘a Labour budget with Labour values’.
He says the priorities will be: “Cutting NHS waiting lists, cutting the national debt and cutting the cost of living.”
Prime Minister’s Questions
Not long to go now. Prime Minister’s Questions has just started. The budget will follow at around 12.30pm.
The red box
The traditional photos of the Chancellor posing outside No 11 Downing Street with her ministerial red box have been published.
Protesters arrested
The Metropolitan Police said they had made “several arrests” after farmers drove their tractors to a Budget day protest in central London in defiance of restrictions on bringing agricultural machinery to the demonstration.
The police warned on X that: “Anyone breaching conditions by bringing vehicles, including tractors or agricultural vehicles, to today’s farmers protest will be asked by officers to leave.
“If they refuse to comply with the conditions, officers will have to make arrests for offences under the Public Order Act.”
And the force said: “We have already spoken to a number of individuals this morning to advise them of the conditions.
“The majority have listened to officers and complied with the conditions, however, several arrests have been made.”
Meanwhile, Nigel Farage has said Reform UK would pay for the defence of farmers arrested at the protest.
‘Fair and necessary choices’
This morning’s cabinet meeting to discuss the budget has concluded. According to Downing Street, the Chancellor told ministers that the government was making ‘fair and necessary choices to strengthen our foundations and drive down the cost of living’.
The Prime Minister thanks Rachel Reeves and her wider team for their work on the budget, saying that they had achieved ‘balance, stability and fairness’. Keir Starmer said the measures will ‘directly drive down the cost of living for people right now’.
Farmers’ protest
Tractors have bene parading around central London as farmers stage a protest ahead of the budget today. Campaigners from the National Farmers’ Union gathered in Trafalgar Square this morning. They are protesting against changes to inheritance tax.
Minimum wage increase
Last night (November 25), the govenrment confirmed that the National Minimum Wage and National Living Wage will increase next April. The new rates hike means that the a full-time worker will see an annual earnings increase of £1,500 from 2026.
In the North West, 370,000 workers are expected to directly benefit from the increase. You can find the new rates here.
Predictions
The government has already announced some measures that will be in the budget today including an increase in the minimum wage, the option for mayors to introduce a tourist tax and extending the sugar tax to pre-packaged milkshakes and lattes. There have also been strong hints that the two-child benefit cap will be lifted and that some form of ‘mansion tax’ will be introduced.
