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
Image source, PA MediaJust before the minimum wage increase was announced, Reeves said that the government would crack down on fraud.
She adds that the government will publish a “Get Britain Working” white paper designed to get those who are unemployed back to work and reduce the strain on the benefits system.
There will be a new crackdown on tax avoidance, Reeves adds.
As announced yesterday, Reeves says the National Living Wage for people aged 21 or older will rise by 6.7% from £11.44 an hour to £12.21 from next April.
Earlier this year the Low Pay Commission, external recommended that the National Living Wage should increase by 5.8% to £12.10, but the chancellor has gone slightly further.
In addition, the National Minimum Wage will rise for people aged between 18 and 20-years old from £8.60 to £10.
Apprentices will get the biggest pay bump, with hourly pay increasing from £6.40 to £7.55.
The chancellor says she will reduce wasteful spending and sets out a 2% productivity savings target for government departments.
She also announces the appointment of a Covid corruption commissioner.
Reeves also confirms that David Goldstone has been appointed as the chair of the new Office for Value for Money, "to help us realise the benefits from every pound of public spending".
Henry Zeffman
Chief political correspondent
Forty billion – that’s the amount Rachel Reeves has confirmed the Budget will increase taxes by.
All numbers sound big when you’re talking about the public finances. But rest assured, that is a really very big number.
Rachel Reeves instantly said that “any chancellor standing here today” would have to do the same if they wanted to be “responsible” and “rebuild public services”.
She is making a political judgment that the public will agree that any pain incurred from tax rises is both inevitable and necessary.
The Conservatives will argue that a significant chunk of this is not inevitable, but instead a political choice made by a political party ideologically predisposed to tax and spend.
Reeves says Budget will raise taxes by £40bn
Reeves says they cannot undo "14 years of damage in one go", and they will work according to the stability rule.
The stability rule, Reeves says, means they will bring the current Budget into balance so they don't borrow to fund day-to-day spending.
She says net borrowing will decrease over time.
Chancellor Rachel Reeves: Invest, invest, invest
Reeves has outlined the key principles that the Labour Budget will cover.
Key among them, she says, is restoring economic stability to Britain, and increasing investment.
She adds that the government will ensure that all of the UK can meet its potential.
Additionally, the government aims to tackle economic inactivity, and expand opportunities for small and medium sized businesses.
There will be increased funding for science, and investment in carbon capture and storage.
Reeves says the OBR has published a detailed assessment of Labour's policies for the next decade.
Listing its forecasts, she says real GDP growth will be 1.1% in 2024, 2.0% in 2025, 1.8% in 2026, 1.5% in 2027, 1.5% in 2028, and 1.6% in 2029.
"This Budget will permanently increase the supply capacity of the economy, boosting long-term growth," she says.
Faisal Islam
Economics editor
A punchy start from the chancellor on her economic inheritance, seeking to heap the blame for all these tough decisions on her predecessors.
“Their austerity broke the National Health Service. Their Brexit deal harmed British businesses. And their mini-Budget left families paying the price with higher mortgages," she said.
As I reported earlier, the OBR review of the last Budget process concludes the previous government "did not provide the OBR with all the information available to them” and would have led to a “materially different” forecast.
Reeves said they will list hundreds of examples of spending pressures that they have to fund, that were not made clear.
Reeves now sets out inflation predictions.
She says today, the OBR say CPI inflation will average 2.5% this year, 2.6% in 2025, then 2.3% in 2026, 2.1% in 2027, 2.1% in 2028 and 2.0% in 2029.
The chancellor now thanks her predecessors for their "wise counsel" as she prepared for the Budget, including Kwasi Kwarteng who she quotes as admitting his mini-Budget was "not perfect".
The House erupts into laughter and jeering.
Reeves says that the previous government failed to budget to compensate victims of the Post Office or the infected blood scandals.
She says her government will provide £11.8bn for victims of the infected blood scandal, and £1.8bn to compensate victims of the Post Office scandal.
This Budget will raise taxes by £40bn, Reeves tells the Commons.
Any chancellor would "face the same reality," she says, and any “responsible chancellor would take action.”
Reeves says Britain inherited broken public finances and broken public services.
She says the British people can see it in long NHS waiting lists, children sitting in crumbling schools, rivers filled with polluted waste, criminals not being punished and crimes not being investigated.
"This is the country's inheritance from the party opposite," she says, adding their plans relied on a baseline for spending this year which "we now know was wrong", because she says it did not take into account the so-called £22bn "black hole".
Reeves says the Office for Budget Responsibility (OBR) has published its own review into the Spring Budget forecast.
The OBR says the previous government did not provide them with "all the information" and if they had known their Spring Budget forecast for spending would have been "materially different", Reeves says.
She says that means any comparison between today's forecast and the spring forecast would be "false" as the Tories "hid the reality".
She calls this the "height of irresponsibility" and that they called an election to "avoid making difficult choices".
Reeves promises the British people that they wont let a government play "fast and loose" with finances and they won't hide the truth of the finances.
She confirms they will implement the 10 recommendations from the OBR's review.
Henry Zeffman
Chief political correspondent
Rachel Reeves opens with a condemnation of the Conservative Party, who she says “failed” Britain.
It’s striking that she did not confine her criticism to just the governments of recent years, but instead laid the blame at the full 14 years.
First, she said, “their austerity broke our NHS” – that’s an attack on the Cameron government of 2010-2016.
Then, she said, “their Brexit” damaged British businesses – that’s May and Johnson, 2016-2022.
And finally she attacked Liz Truss’s mini-Budget.
The chancellor wants to remind those taxpayers who may be about to encounter some difficult news that, as far as she is concerned, that is because of the Conservative record.
Image source, UK ParliamentReeves again points to the so-called “£22bn black hole” in the UK’s finances. She adds that the Treasury reserves were spent three times over three months into the last financial year.
The government will publish a line-by-line breakdown of the £22bn that will include hundreds of unfunded pledges, she says.
The Conservatives failed our country, the chancellor says.
Reeves says austerity broke the NHS and that the Tories' Brexit deal harmed businesses.
She also hits out at Liz Truss's mini-budget, to jeers in the chamber.
"The British people have inherited their failure, a black hole in the public finances, public services on their knees, a decade of low growth and the worst parliament on record for living standards".
The only way to drive economic growth is to "invest, invest, invest," Reeves says.
She says economic stability must be restored and the page turned on the last 14 years.
Cheers and jeers rumble through the chamber as she says that it is not the first time it has fallen to the Labour Party to rebuild Britain, listing 1945, 1964 and 1997 to illustrate her point.
Reeves then mentions that it is the first Budget "in our country's history to be delivered by a woman" and that she is "deeply proud to be the first female chancellor".
Rachel Reeves opens Budget as UK's first female chancellor
Cheers fill the room as Chancellor Rachel Reeves gets to her feet.
She starts by saying the country voted for "change" on 4 July at the general election.
She says the Labour government can "fix the foundations".
Change must be felt, she says, with more "pounds in people's pockets, an NHS that is there when you need it, an economy that is growing".
Emily Atkinson
Live page editor
Prime Minister's Questions has just ended, which means it's time for Rachel Reeves to deliver her Budget.
The chancellor will speak for around an hour. The Leader of the Opposition, Rishi Sunak, will then respond to the measures in one of his last major outings as Conservative Party leader.
We'll be covering it all with live updates and expert analysis on this page - follow along by tapping the watch live button above.