#budget-2025

#budget-2025

Labour leaders in Edinburgh and Cardiff sought credit for the most progressive measures in Rachel Reeves' budget on Wednesday, pinning their hopes for next year's critical elections on a package that increases funding for Scotland and Wales by nearly 2bn. That funding boost and the abolition of the two-child limit for universal credit recipients were seen as a relief in both capitals.

When Rachel Reeves urged Labour MPs at a half-empty private meeting on Monday night to back her high stakes budget, she told them that while they might not like everything in it, she was convinced that overall it was fair. After weeks of anxiety on the backbenches over manifesto breaches and speculation over Keir Starmer's leadership, she was determined to reassure them that her plans were Labour through and through and would give them plenty to offer voters on the doorstep.

Rachel Reeves has said she put the public finances on a firm footing at the last budget - but argued that, since then, "the world has thrown even more challenges our way". The chancellor has once again left the blame at the door of the previous government, pointing to "Liz Truss's disastrous mini budget and the 22 billion pound black hole in the public finances". She also pointed to Donald Trump's tariffs and the demand for increased defence spending as she set the stage for sweeping tax rises expected in three weeks time.

"I'm leading the child poverty task force and I've been doing that work from government. "But I'm clear about what needs to happen. I'm clear about what the evidence tells us. And I'm clear about what we need to do." She added: "There's a real urgency about this because every year that passes, as children are born, as they move into that system, the numbers go up, child poverty rates increase. So we have to tackle it."

She added that any borrowing from the reserve - which amounted to £9 billion last year but is being halved in 2025 - would have to be repaid. The Reserve is intended for "genuinely unforeseen, unaffordable and unavoidable pressures" but has in recent years been used to fund public sector pay deals and compensation settlements.