Labour’s Budget 2025 clearly didn’t get off to a good start with the Office for Budget Responsibility (OBR) publishing its economic forecast early – an embarrassing moment to kick things off.
It should have been “mum’s the word” until Rachel Reeves had stood up to make her announcements.
“Mum’s the word” takes me to one of the bigger talking points, the scrapping of the two-child limit on entitlement to universal or tax credits from next April.
As someone dealing with many charity clients, I do hope that this measure will have the desired effect of reducing the number of children living in poverty, which is apparently around 44% for children in families with three or more kids – a statistic that really surprised me. However, the scrapping of this measure is thought to have a long-term cost of £3.6bn per year, which is a significant cost which will need to be recouped from somewhere.
The vast majority of this is coming from the freeze on tax thresholds until 2031, which will take more people into higher-rate and affect a great number of people across the country.
The money needs to come from somewhere, but with an estimated 780,000 more people paying income tax in 2029-30, will Labour’s popularity with larger families help to offset the discontent of the significant percentage of the population affected by a tax increase?
A highlight for me was hearing Kemi Badenoch’s witty response to the Budget, calling it “The Nightmare Before Christmas” and calling Starmer and Reeves “Laurel and Foolhardy”. It is nice to see that, in these difficult times, some politicians still have a sense of humour and a bit of personality.
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The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.