Chancellor Rachel Reeves tells the BBC it's likely her tax-raising Budget may affect wage growth for workers, as businesses will have to absorb the costs of paying more National Insurance or give out smaller pay rises
Asked about the impact of increasing NI contributions for employers by 1.2% from April 2025, she says: "I said that it will have consequences"
The government says it will raise £25bn from the measure - but the Institute for Fiscal Studies think tank claims it will raise just £16bn, because businesses will scale back wage rises
In a visit to a hospital in the West Midlands alongside Reeves, PM Keir Starmer says NHS funding in the Budget is a "down payment" on the health service's future, but adds staff workload will "likely to go up, not down"
Key takeaways: Labour's first Budget in 14 years features tax rises worth £40bn to fund the NHS and other public services - read the main measures here
'Right thing' for businesses and wealthiest to pay more - Reeves
The supply of affordable housing is set to increase under provisions in this Budget, Reeves says.
The government will reduce Right to Buy Discounts. Local authorities, meanwhile, will retain receipts from the sale of any social housing so that it can be reinvested into their existing stock and new supply.
The chancellor says the government will invest more than £5bn to deliver their housing plan.
She says this Budget will increase the Affordable Homes Programme to £3.1bn, provide £3bn worth of support and guarantees to increase the supply of homes and support small housebuilders.
She promises to provide investment to renovate sites across the country - including at Liverpool Central Docks - to deliver 2000 new homes.
Reeves now lays out funding for the science sector.
She says the government will protect government investments in research and development "to unlock these growth industries of the future" with more than £20bn of funding,
The chancellor adds it will include at least £6.1bn to protect core research funding for areas like engineering, biotechnology and medical science.
Faisal Islam
Economics editor
While briefings about a hefty increase to National Insurance were correct, the suggestion of an ongoing freeze in income tax thresholds was incorrect.
The chancellor is going to end that freeze from 2028.
In generally thin pickings, this qualifies as a small white rabbit. She must have been rather tempted to maintain the freeze, the sneakiest of stealth taxes.
I specifically asked her about this during the election campaign and she did not guarantee she could afford this move. It means that the constant growth of taxpayers being sucked in to higher tax brackets will slow.
Reeves is now setting out her plans for investment.
The government will capitalise the national wealth fund to invest in "industries of the future".
Building on this, she says they will drive forward a "modern industrial strategy" to set out the sectors with the "biggest growth potential".
They are today confirming nearly £1bn for the aerospace sector, over £2bn for the automotive sector and up to £520m for a new Life Sciences Innovative Manufacturing fund.
Simon Jack
Business editor
Although increasing employers' National Insurance (NI) by 1.2%, and reducing the threshold at which employers pay it to £5,000 from £9,100 - the chancellor said she would extend the amount employers can claim back from their National Insurance bill from £5,000 to £10,500.
Reeves says a return to economic stability will create the right condition for investment.
She says public investment was set to fall under the previous government's plan, but will be expanded under this Budget.
"I am confirming our investment rule," Reeves says. She adds that she will ensure that the investment will deliver returns for taxpayers.
She says the government plans to install guardrails to make sure that spending is "wise".
Sima Kotecha
Senior UK correspondent
Prisons are full and the criminals courts are facing backlogs that mean defendants, witnesses, and victims are having to wait up to several years before giving evidence. The criminal justice system is in crisis.
A 2% cut across all government departments will be unwelcome news to the Ministry of Justice as it faces numerous challenges.
It's promised to sort prisons out and has released thousands of offenders early to ease the pressure on the system. But it’s also committed to more jails and creating an extra fourteen thousand new places.
Those working closely with the department question how it can stick to the plans - and focus on rehabilitation and sentencing - when having to make cuts?
As for the courts - barristers tell us they feel let down by what they call a lack of commitment on cutting the tens of thousands of cases in the backlog, with one saying “more funding is what we need and not less”.
Reeves says the government will support public services across Scotland, Wales and Northern Ireland, saying this Budget provides devolved governments with the "largest real-terms funding settlement since devolution".
She says she will provide £3.4bn for the Scottish government to be spent effectively to improve public services in Scotland, £1.7bn to the Welsh government, and £1.5bn to the Northern Ireland executive in 2025-26.
Simon Jack
Business editor
The current 75% discount to business rates - due to expire in April 2025 - will be replaced by a discount of 40% - up to a maximum discount of £110k.
It still means that many businesses will see their business rates nearly double (rather than quadruple).
The chancellor now says the government will increase funding significantly for local governments next year.
Reeves adds that Greater Manchester and the West Midlands will be the first mayoral authorities to receive integrated settlements from next year.
She says it will give mayors "meaningful control of the funding for their local areas".
Reeves announces a £2.9bn increase to the Ministry of Defence's budget next year.
She also pledges guaranteed military support to Ukraine of £3bn a year for "as long as it takes".
Funding will be allocated for the 80th anniversary of VE and VJ days in 2026 to honour those who "have served at home and abroad", she adds.
There will be no return to austerity, Reeves says.
“But given the scale of the challenge we face in our public services” there will still be hard decisions to come.
She then turns to education, saying that investment into breakfast clubs will be tripled. There will also be a £2.3bn increase to the core school’s budget to ensure hiring of teachers into key subjects.
There will be an additional £300m for further education, Reeves adds.
Reeves: No extension of income tax and NI freeze
There will be no extension of the freeze in income tax and National Insurance thresholds beyond the decisions of the previous government, Reeves says.
From 2028-29, personal tax thresholds will be uprated in line with inflation, she says.
Reeves says that 94% of children in the country attend state schools.
She says she will introduce VAT on private school fees from January 2025, and that the government will soon introduce legislation to remove their business rates relief from April 2025.
The chancellor says she will increase the windfall tax on oil and gas profits to 38%, which will now expire in March 2030.
Reeves adds that the government will remove the 29% investment allowance.
To ensure the oil and gas industry can protect jobs and support our energy security, we will maintain the 100% first year allowances and the decarbonisation allowance too, she adds.
Reeves announces the government will increase the stamp duty land surcharge for second-homes, by 2% to 5% from tomorrow, Reeves says.
Reeves says she will increase Capital Gains Tax rates on carried interest to 32% from April 2025 and, from April 2026, deliver further reforms.
Dearbail Jordan
Business reporter
For a moment there it looked like Reeves was going to raise fuel duty - but motorists and businesses can breathe easy.
If she had decided to reverse the existing 5p per litre cut and let petrol and diesel duty rise in line with inflation it would have raised £3bn.
But she's holding off.
Image source, PA MediaReeves says she will abolish the non-dom tax regime and remove the "outdated concept" of domicile from the tax system from April 2025.
This applies to a UK resident whose permanent home - or domicile - for tax purposes is outside the UK. It means they do not pay UK tax on money they make elsewhere in the world.
She says she will introduce a new, residence-based scheme with "internationally competitive arrangements" for those coming to the UK on a temporary basis.
The Office for Budget Responsibility says this package of measures will raise £12.7bn over the next five years, she says.