The Chancellor announced a raft of measures aimed at easing the cost of living as well as a series of tax increases
The Budget includes billions of pounds for Greater Manchester through several pots of funding
Rachel Reeves set out her tax and spending plans as she delivered her second budget since Labour came to power. The Chancellor announced a raft of measures aimed at easing the cost of living as well as a series of tax increases raising £26bn in total.
Household energy bills are expected to come down by around £150 a year on average, while rail fares have been frozen and the 5p cut in fuel duty has been maintained. However, tax thresholds will be frozen which Ms Reeves admitted will affect ‘working people’.
The removal of the controversial two-child benefit cap, which promises to lift hundreds of thousands of children out of poverty, has been welcomed by MPs and campaigners in Greater Manchester. Meanwhile, mayors across the country, including Andy Burnham, will be allowed to introduce a tourist tax in their regions – something that local leaders and think tanks have been lobbying for for years.
Billions of pounds have also been allocated to mayors with several pots of funding benefiting Greater Manchester. The Chancellor also reiterated her commitment to Northern Powerhouse Rail. However, she still hasn’t set out what the long-promised project will include.
Cost of living
There are several measures announced in the budget today (November 26) which are aimed at cutting bills and boosting pay packets. This includes scrapping ‘legacy’ costs on energy bills from April – a move which is expected to save the average household £150 a year.
According to the government, 280,000 poorer households in the North West will save up to £300 when combined with the recent expansion of the Warm Homes Discount. Ms Reeves also confirmed rail fares will be frozen while the 5p cut in fuel duty will remain.
Chancellor Rachel Reeves(Image: Anadolu via Getty Images)
Meanwhile, the National Living Wage will go up, boosting pay for full-time workers in the North West by £900 a year, the Treasury has said. Full-time workers on the 18-20 National Minimum Wage rate in the region will see a £1,500 rise, according to the government.
The State Pension is also due to increase as the government commits to the ‘triple lock’ for the rest of this Parliament. This means that pensioners on the full new State Pension in the North West will receive an extra £575 a year from April 2026, the Treasury has said.
Tax thresholds
While income tax, national insurance and VAT will not be increasing, the thresholds at which people are required to pay them will be frozen. The Chancellor admitted that this will affect ‘working people’, telling MPs that she is ‘asking everyone to make a contribution’.
The move means that, as wages and inflation increase, more people will be paying higher rates of tax. This has led some, including the influential Institute for Fiscal Studies of accusing Ms Reeves of breaking Labour’s manifesto promise not to hike tax on working people.
Elsewhere in the budget, the Chancellor announced a ‘mansion tax’ with properties worth more than £2m to be charged £2,500 a year, rising to £7,500 from properties worth more than £5m. This will be collected alongside council tax from 2028 and levied on owners.
However, local leaders have expressed concerns about how the high-value council tax surcharge as it appears the proceeds will go straight to central government. The Local Government Association said that this funding must be available to support local councils.
Two-child benefit cap
The controversial two-child benefit cap has been lifted as part of the budget. The move, which means that larger families with more than two kids will be able to claim more benefits, is expected to lift 450,000 children out of poverty at a cost of around £3bn a year.
The policy, which was introduced by the Conservative government, has been labelled as ‘cruel’. But Labour refused to lift it last year.
Several Greater Manchester MPs have welcomed the lifting of the cap alongside campaigners. Graham Whitham, Chief Executive at Greater Manchester-based charity Resolve Poverty, said that the announcement is a ‘huge win for families’ but must be ‘just the start’.
It comes as child poverty rates remain high across Greater Manchester with as many as two-thirds of children living in poverty in some neighbourhoods. The End Child Poverty Coalition estimates that one in every nine children live in a family affected by the benefit cap.
Tourist tax
The government announced ahead of the budget on Tuesday (November 25) that mayors will be allowed to introduce a tourist tax. The ‘modest charge’ would apply to visitors staying at overnight accommodation including hotels, holiday lets, B&Bs and guesthouses.
The move has been welcomed by Northern mayors, including Andy Burnham who, alongside other local leaders, has been lobbying for an overnight visitor levy for years. He has previously said the money raised would go towards public transport and other local services.
Money for mayors
This includes £2.5bn over the next three years in the integrated settlement which gives the mayor more flexibility over how he spend his money.
Both the Greater Manchester Combined Authority and its Liverpool City Region equivalent will also have access to a new Local Growth Fund and a Mayoral Revolving Growth Fund. The £1.4bn package will fund ‘infrastructure, business development and skills’.
The government will also devolve £1.3bn through the National Housing Delivery Fund to local leaders including the Greater Manchester mayor. And the Greater Manchester Housing Investment Fund will be extended, as announced earlier this year.
Northern Powerhouse Rail
Rachel Reeves reiterated the government’s commitment to Northern Powerhouse Rail in her budget speech. However, she still has not set out what the major transport project for the North of England – which was first announced more than a decade ago – will include.
The project is expected to include a new line from Liverpool to Manchester via the airport with local leaders lobbying for a new underground station at Piccadilly. A new station at Bradford could also feature in the plan with upgrades elsewhere in Yorkshire too.
Making the commitment when she unveiled her Spending Review on June 11, the government said that more details would be revealed ‘in the coming weeks’. Last week, the government said that such an announcement will be made ‘in the near future’.