Dearbail Jordan
Business reporter

The International Monetary Fund's support for Rachel Reeves's Budget is a huge boost for the chancellor.

It is very unusual for the IMF to comment in this way. And people care what the organisation has to say because it helps oversee global economic stability and bails out countries in trouble.

The added bonus for Reeves of the IMF's response is that it couldn't contrast more starkly with what it said about the now infamous mini-Budget, given two years ago under the short-lived premiership of Liz Truss.

That proposed £45bn in unfunded tax cuts, unleashing financial market turmoil which pushed up mortgage rates.

This was at a time when the cost of living crisis was particularly acute and the IMF warned the tax cuts risked stoking inflation and increasing inequality between rich and poor.

Truss ended up sacking her chancellor Kwasi Kwarteng before she resigned after 49 days in the job.

The IMF's intervention wasn't the final blow but it certainly didn't help matters.

We've been talking a lot about National Insurance (NI), after Rachel Reeves announced an increase in employers' National Insurance (NI) contributions by 1.2% from April.

But what exactly is NI?

NI contributions - paid by employees, employers, and the self-employed - are used to pay for benefits and to help fund the NHS.

Workers start paying NI when they turn 16 and earn more than £242 a week, or have self-employed profits of more than £12,570 a year.

The government announced an increase in employers' NI contributions from 13.8% to 15%, which they claim will raise £25bn a year by the end of the Budget period.

As promised by the chancellor and prime minister before the election, working people's NI contributions will not change.

However forecasters claim the employer NI hike is likely to impact pay for workers as businesses try to absorb the increased cost.

Glenn Campbell
BBC Scotland Political Editor

Image source, PA Media

There’s a dispute between the UK and Scottish governments over the impact of employers’ National Insurance increases on NHS Scotland and other devolved public services.

The Scottish finance secretary, Shona Robison, has told the BBC she is “seeking urgent clarity” from the Treasury to ensure these additional costs are “fully covered”.

She is seeking additional cash from the UK government to offset the impact.

However, Chancellor Rachel Reeves has said the extra £3.4bn for the Scottish government announced in her Budget “takes into account all of those pressures”.

The Scottish government says it needs a further £500m.

The indications from Labour sources yesterday were that there would be further discussions on this point that would result in extra funds being released by the Treasury.

James Landale
Diplomatic correspondent

Image source, Getty Images

International charities are furious with the government for cutting foreign aid spending in the Budget.

The Treasury said it would spend £13.3bn on overseas development assistance this financial year.

But the chancellor chose not to renew a £2.5bn top-up the Tories introduced two years ago.

That was to compensate for the huge amount of foreign aid being spent not overseas but here in the UK housing asylum seekers.

Without the top up, that means spending on aid priorities overseas will be cut by almost £2bn.

The Treasury said it was committed to cutting asylum costs. But Bill Gates, co-chair of the Bill & Melinda Gates Foundation, said the aid cuts were “a disappointing outcome for the world’s most vulnerable people”.

The charity network, Bond, said the cuts were “short-sighted” and would hit marginalised communities around the world.

Alison Holt
Social affairs editor

Higher staffing costs announced in the budget will make it hard for some care homes to survive, according to the boss of one care company.

Mike Padgham runs five residential and nursing homes in North Yorkshire supporting older and disabled people.

He has 210 staff, and his current wage bill is £5.3m a year. He estimates each month the increase in employers' National Insurance will cost an extra £5,000, and the increase in the National Minimum Wage will add another £25,000.

Most of his residents are funded by the local authority and Padgham says he will have to ask for higher fees.

Local authorities will get an additional £600m for adult and children’s social care, but Padgham questions how much of that will reach them.

Care providers have long complained that financially squeezed councils don’t pay enough to cover the real costs of care.

He believes this could push some care homes out of business - “unless it is matched by extra funding to those who commission care and there was little sign of that".

A lot of bucks - but maybe not the big bang to public servicespublished at 10:06 Greenwich Mean Time 31 October

10:06 GMT 31 October

Dharshini David
Chief economics correspondent

A bigger state doesn’t necessarily translate into a boost to prosperity or a sustained improvement in public services all round.

That seems to be the conclusion, as economists have had time to fully digest the hundreds of pages published by the Treasury and the Office for Budget Responsibility.

With the latter predicting that the bulk of the rise in employers' National Insurance contributions will be passed on to workers in the form of weaker wage and jobs growth, the Resolution Foundation reckons the “poorest half of households face a 0.8% reduction in their annual income on average, while the richest half face a 0.6% decrease”.

The boost to public investment may well improve growth prospects in 10, 15 years - but remember the OBR has said these taxes will also set back business investment, perhaps by £25bn; and that is crucial to rebooting growth

Meanwhile, as I highlighted yesterday, while the chancellor’s public spending injection means a huge boost to many departments budgets in the next couple of years, the totals she’s outlined after that imply that some - for areas such as law and order or higher education - won’t keep pace with inflation or population growth in those that follow.

A lot of bucks - but perhaps not the big bang to our wellbeing you might expect.

What have we learned about the £22bn ‘black hole’?published at 09:56 Greenwich Mean Time 31 October

09:56 GMT 31 October

By Anthony Reuben

In her Budget announcement yesterday, Rachel Reeves referred again to the £22bn “black hole” that she claimed to have found in the public finances when she arrived at the Treasury.

She referred to a report from the Office for Budget Responsibility, saying: “Had they known about these undisclosed pressures that have since come to light, then their spring Budget forecast for spending would have been and I quote, ‘materially different’.”

But Rishi Sunak said the OBR had declined to support her claims of a £22bn black hole, saying: “It actually appears nowhere in their report.”

The OBR asked the Treasury for an estimate of the pressures on departmental spending that should have been known about for the March forecast and was told about £9.5bn worth.

So the OBR did find that there were things that it should have been told about for its March forecast, but not as much as the £22bn claimed by the government.

Image source, EPA

Former sub-postmaster and campaigner Sir Alan Bates has described the announcement that £1.8bn has been set aside for the victims of the Horizon scandal as "interesting", though added that the "devil is in the detail".

Bates leads the Justice for Sub-postmasters Alliance, campaigning on behalf of hundreds of sub-postmasters who were wrongly convicted after faulty software showed money missing from their branch accounts.

In her Budget on Wednesday, Chancellor Rachel Reeves announced that £1.8bn would be put aside to help compensate those affected.

Speaking to the Daily Mirror, external following the announcement, Bates said he hadn't been "aware that the chancellor was making any update or announcement regarding our long-awaited compensation" but that it was "interesting".

Kevin Peachey
Cost of living correspondent

Image source, Getty Images

Much of what Chancellor Rachel Reeves announced in the Budget could affect you and your finances directly, so here's what it means for you:

• If you're on low pay, your wages should rise - as minimum wages, paid by employers, will rise across the UK in April
• But bosses say your job prospects could be affected as on top of the extra cost of paying staff on the minimum wage, many employers will have to make a bigger contribution to National Insurance (NI) covering more of the people they employ.
• Travelling to work by bus may cost you more, as the single bus fare cap applied to many routes in England will be raised to £3 in 2025, up from £2
• Smoking and vaping will cost you more, as taxes on tobacco are going up and a flat rate of duty will be applied on all vaping liquid from October 2026
• Private school fees will rise, as a VAT of 20% will be added to private school fees from 1 January, 2025
• The chancellor confirmed the amount received in benefits will rise by 1.7% in April in line with inflation, and the state pension will rise in line with average earnings, going up by 4.1% in April

Click here to read the full story

Peter Hoskins
Business reporter

Image source, Getty Images

The Budget will hit living standards in the short-term as the government hopes to drive economic growth in the longer-term, according to the Resolution Foundation think tank.

Chancellor Rachel Reeves' decision to increase taxes and borrowing to raise funding for public services and investment is a clear move away from the cuts set out by the previous government, it said.

But it warned the Budget "has not yet delivered a decisive shift away from Britain’s record as a ‘stagnation nation’," as the outlook for both growth and living standards remains weak.

“The short-term effect of these changes will be better-funded public services," Mike Brewer, interim chief executive of the Resolution Foundation, said.

"But families are also set for a further squeeze on living standards as the rise in employer National Insurance dampens wage growth," he added.

Image source, PA Media

Liberal Democrat leader Sir Ed Davey has welcomed investment in the NHS, and acknowledges what he calls the "economic mismanagement" of the previous government, but says he is worried about a lack investment in social care.

Speaking earlier to BBC Radio 4's Today programme, he says that while the government has exempted the NHS of increases to employers' National Insurance contributions, smaller care providers will be impacted by the increase.

Davey says he is also worried that the tax measures put forward by the chancellor will hit small businesses.

On changes to agricultural and business property relief, Davey says it will cause "massive damage" to farmers already "on their knees."

On the measure to tax private school fees from January 2025, Davey says he would vote against it, and that it could impact smaller private schools who work with children with special educational needs.

Reeves concedes wages will be hit to pay for NI risepublished at 08:57 Greenwich Mean Time 31 October

08:57 GMT 31 October

Dearbail Jordan
Business reporter

So there you have it, the chancellor has acknowledged that workers will likely end up paying for some of those big hikes to National Insurance by employers.

What it could mean is that wages will not rise as quickly as they may have done without the measure.

So one year, you might get a 2.5% pay rise, the next a 2% increase then a 1% bump.

The Conservatives cut workers' National Insurance twice, the most recent of which was a pre-election giveaway. In total, that cost around £20bn a year.

Now Labour are increasing National Insurance for businesses to raise around £25bn.

The Bank of England's former governor Meryn King has said that Labour should have been upfront about workers' taxes from the get-go. Labour pledged not to raise workers' taxes in its manifesto.

He criticised the Tories for cutting National Insurance in the first place given the pressures on the public finances. But he said: "Honestly, I think that would be much better now just to say to people 'this is where we are', be completely straight with people. Say 'we made that pledge in the heat of an electoral battle, it was a mistake, we regret it and we're going to unwind it'."

Was Reeves's comment to BBC Breakfast this morning tacit acknowledgement of this?

Robinson and Reeves have a back and forth next on the topic of promises made before the Budget was delivered.

Robinson asks: “Do you wince when I say the words that you said during the election: every Labour policy will be fully-funded and fully costed no ifs, no ands, no buts?”

Reeves says she had "no idea" the previous government had made so many unfunded promises.

Robinson interjects: “You should have listened to the Today programme because we asked you about it," adding journalists - like him - repeatedly pointed out the figures didn't match up to what Labour was saying and that she said she wouldn't raise taxes.

Reeves: “This is really important - nobody knew." She says she owns the decisions she made yesterday and that these are the right decisions.

Robinson pushes back, asking here whether "at best" she was not open with people, "at worst that you were downright dishonest about what was inevitable going to happen after you came to office?”

Reeves says she stuck to many of her commitments, and she's "not denying" she had to make tricky decisions, but she did what she had to get the public finances back on track.

Reeves is next grilled on her commitment to raise taxes for the benefit of public services like the NHS.

Nick Robinson quotes Health Secretary Wes Streeting as saying "pouring money into a failing system" won't work and puts it to Reeves that she's doing just that without outlining the plans for reform.

Reeves responds by saying Labour felt the NHS needed an "immediate injection" of cash and that they had responded to that need in the Budget.

As a reminder, she announced a £22.6bn increase in the day-to-day health budget as well as a £3.1bn increase in the capital budget.

Reeves adds that there is also a 2% "efficiency and productivity" target for this year and next in the NHS, arguing Labour has gone further than the previous government in terms of driving efficiency and productivity.

On the Today programme, Nick Robinson quotes Reeves as previously saying "economic growth comes from the success of business" and asks why she's putting a "£25bn tax on British business".

Reeves repeats what we've just heard her say on BBC Breakfast, that she had hard choices to make - and acknowledges for the second time this morning there's going to be consequences such as smaller pay rises.

She also points to the government's international investments summit in London a couple of weeks ago, during which investors announced £63.5bn investment into the UK.

"That is vote of confidence into this government and what we are doing," Reeves says, adding that she had always been really clear that the most important part of driving growth was to stabilise the economy.

Pushed on some businesses expressing anger at National Insurance Contributions being raised for employers, Reeves insists it was a difficult choice that had to be made - but that in the long run, it'll translate into growth for the economy.

We've just heard the chancellor on BBC Breakfast, during which she acknowledged that businesses will have to absorb the costs of paying more National Insurance or give out smaller pay rises.

We're now going to hear more from Rachel Reeves when she speaks to BBC Radio 4's Today programme in the next few minutes, so stay with us.

Reeves' BBC Breakfast interview finished with a question about the anger expressed by some farmers, following changes made to inheritance tax and people who own agricultural land.

She ultimately says the changes are "fair and proportionate, so that anyone with land can pass on above the normal inheritance tax allowances, £1m worth of land".

The chancellor says that 73% of land passed on won't be affected "at all" and that smaller farmers wont be affected by this - and adds that any land passed on above the £1m will be taxed at 20%, not 40%, and that people will have 10 years to pay that inheritance tax if they are not in a position to pay it right away.

"We know that there are a lot of landowners who are very wealthy, some of whom buy land to avoid paying inheritance tax," she tells the BBC, bringing the interview to an end.

The BBC's Charlie Stayt pushes Reeves on the "consequences" she's just admitted may be felt by businesses as a result of her National Insurance tax changes.

He specifically asks whether such consequences may be that fewer people are employed and if they'll receive smaller pay rises.

She responds:

"It will mean that businesses will have to absorb some of this through profits and it is likely to mean that wage increases might be slightly less than they otherwise would have been.

"But, overall, the Office of Budget Responsibility forecast that household incomes will increase during this Parliament.

"That is a world away from the last Parliament, which was the worst Parliament ever for living standards."

Now onto National Insurance, one of the most-talked about areas of this Budget, and Reeves is pushed on whether taxing employers more really allows for growth.

She repeats some of what we've heard her say before - that she inherited a £22bn black hole and she had to do something to fix that, especially if there was any chance of fixing problems like NHS waiting times.

"I decided the right thing to do was to ask businesses and the wealthiest in our country to pay a bit more," she tells the BBC, insisting she did all she could to protect smaller businesses

"I have always said I would put stability front and centre," Reeves says, adding that's what is important to allow business and families to plan ahead.

"They weren't easy choices, and I recognise there will be consequences."

Will one of those consequences be fewer people employed and smaller pay rises?

She says it is likely wage rises will be smaller but that overall the OBR forecasts that household income will increase, which, she claims, is much better than predictions under the Tory government.

The chancellor is pressed on the OBR's forecast that there will be 2% growth next year and then slightly less the following two years, and asked whether it's enough to encourage people.

She insists she wants to do more but she has to start somewhere.

"My ambition for Britain burns brighter than ever. We have huge potential," she says, adding that her Budget is just the start - and an important start because it allows the country's finances to get back on track.

She adds that the IMF has said the plans will get the country on the right path.