What's happened
Chancellor Rachel Reeves' recent budget has sparked controversy after raising employer national insurance contributions, contradicting Labour's election pledge not to increase taxes on working people. Critics argue this move will ultimately reduce workers' wages, undermining public trust in the government.
Why it matters
What the papers say
According to The Independent, Chancellor Rachel Reeves acknowledged that the increase in employer national insurance contributions would impact wage growth, stating, 'We faced a £22bn hole in the public finances… we had to increase taxes yesterday.' Meanwhile, IFS director Paul Johnson criticized the government's stance, saying, 'The continued pretence that these changes will not affect working people risks further undermining trust.' This sentiment is echoed by Resolution Foundation's Mike Brewer, who emphasized that the levy is 'clearly a tax on working people.' The Guardian highlights that Labour's budget is a response to a dire economic inheritance, with Reeves asserting the need for tax increases to stabilize public finances. However, the backlash from opposition MPs and business leaders suggests that the government's definition of protecting working people is being challenged.
How we got here
Labour's first budget in 14 years aimed to address a £22 billion deficit inherited from the previous Conservative government. The budget included significant tax increases targeting businesses and the wealthy, while promising not to raise taxes on working individuals.
Common question
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Why is Labour's Budget Facing Backlash?
Labour's recent budget announcement has stirred significant controversy, particularly regarding the increase in national insurance contributions. This decision has raised questions about its impact on working families and the broader implications for the economy. Below, we explore the key concerns and reactions surrounding this budget.
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Sir Keir Rodney Starmer KCB QC MP is a British politician and former lawyer who has served as Leader of the Labour Party and Leader of the Opposition since 2020. He has been Member of Parliament for Holborn and St Pancras since 2015.
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Rachel Jane Reeves is a British Labour Party politician serving as Shadow Chancellor of the Duchy of Lancaster and Shadow Minister for the Cabinet Office since 2020. She has been the Member of Parliament for Leeds West since 2010.
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Labor-Gesher was a joint list of the Israeli Israeli Labor Party and Gesher parties for elections for the twenty-second Knesset. The list advocated social democracy and progressive taxation. The list's platform focused primarily on socio-economic issues.
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The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom or Britain, is a sovereign country located off the northwestern coast of the European mainland.
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The Institute for Fiscal Studies is an economic research institute based in London, United Kingdom, which specialises in UK taxation and public policy. It produces both academic and policy-related findings.