So I’m watching the Rachel Reeves budget of October 2024, yeah? First woman chancellor ever. Historic moment. Labour’s initial budget in 14 years. It should’ve been a celebration. Instead? My WhatsApp was going mental. Farmers are fuming. Business owners are panicking. Everybody’s asking, “What has she done to my taxes?”
Six months later, people are still angry. Like, properly angry. Farmers have hit the streets. Businesses are threatening legal action. The whole thing’s turned into a massive row that won’t go away. Let me explain what really happened and why it continues to be a problem.
The Big Day – 30 October 2024
So, on October 30, Reeves stood up in Parliament and announced her very own budget, which she said would “rebuild Britain.” She unveiled a £40 billion tax hike, the second largest in post-war history. That’s massive money. To put that in context, the tax burden it imposes goes up to 38.2% of GDP, also the highest figure we have ever had in this country.
I remember thinking at the time, ‘Blimey, that is a bold thing to say. But it got worse. Way worse.
The N.H.S. received an additional 22.6 billion pounds for day-to-day spending. Schools got more money. Defence got a boost. All sounds wonderful, yeah? Except somebody’s got to pay for it.
Who’s Paying Then?
Here’s when it got really messy. Reeves has said she would do this by hiking up the amount collected in National Insurance from employers by 1.2 percentage points, raising it from 13.8% to 15%. But that wasn’t even the worst bit. She also reduced the threshold from £9,100 a year to £5,000, which means employers start paying NI much earlier.
My mate Dave owns a small café in Leeds. He rang me after the budget, fuming. He said it’s going to cost him an extra £8,000 a year just in NI. Eight grand! For what? He’s not made of money. Most small businesses aren’t.
Capital gains tax went up, too. From 20% to 24% for higher-rate taxpayers. Anyone selling shares or property (except their main home) now pays more. Private schools lost their VAT exemption. From January 2025, school fees got hit with 20% VAT.
But the thing that’s caused the biggest row? Inheritance tax on farms.
The Farm Tax Row – Still Raging
This is where things went properly wrong for Reeves. Before the budget, farmers could pass their farms to their kids without paying inheritance tax. Full 100% relief. Makes sense, right? Farms aren’t like cash in the bank. They’re working businesses that families have run for generations.
Reeves changed that. Now there’s no inheritance tax on the first £1 million of combined agricultural and business assets. Above that, you pay 20% inheritance tax instead of the usual 40%.
Sounds reasonable, maybe? The government reckons it only affects 2,000 of the wealthiest estates. But farmers are saying that’s rubbish. Most family farms are worth more than a million quid when you add up the land, buildings, equipment, and livestock. Doesn’t mean they’re rich, though. It’s all tied up on the farm.
Jeremy Clarkson got involved. There were massive protests in London. Farmers have been up in arms for nearly a year now about their future, as the new taxes could leave their farms unviable after families would be forced to sell off land, livestock and equipment to foot the bill.
I saw this interview with a farmer called Richard Cornock. He’s run his family farm since 1822 and got so emotional talking about it he could barely continue. Said, “I’ve been under so much stress, like most farmers worrying about this tax.” He wanted to pass it to his 14-year-old son. Now he’s not sure he can.
The government keeps saying it’s fair. Farming minister Dame Angela Eagle announced that the Treasury “isn’t going to move” on the policy. But the anger hasn’t gone away. If anything, it’s got worse.
What About Everyone Else?
The Rachel Reeves budget didn’t just hit farmers. It hit pretty much everyone who owns a business or has savings.
The minimum wage went up 6.7% to £12.21 an hour, which sounds great if you’re earning minimum wage. But businesses have to pay for that. Combined with the NI rise, loads of small businesses are struggling.
Bus fares went from £2 to £3. Stamp duty on second homes jumped from 3% to 5%. Private schools lost their business rates relief on top of the VAT thing.
Oh, and that non-dom tax status for rich foreigners living here? Gone. Wealthy foreigners will no longer benefit from non-dom tax status following the abolition of the controversial regime.
Reeves claimed she kept every promise on taxes from Labour’s manifesto. Technically true, I suppose. They didn’t raise income tax rates, VAT rates, or employee National Insurance. But hitting employers’ NI and everything else? That feels like dodging the question, doesn’t it?
Did It Work Though?
Here’s the thing. The Office for Budget Responsibility said the budget would temporarily boost GDP in the near term but crowd out private activity in the medium term. Translation? It might help a bit now, but could hurt later.
Growth forecasts? The OBR expects 1.1% growth in 2024, 2% in 2025, then 1.8%, 1.5% and 1.5% in the following years. That’s not exactly booming, is it?
And get this: the fiscal watchdog said average real household disposable incomes would be around £300 lower per person as a result of the budget. So we’re all going to be worse off. Brilliant.
The £22 Billion Black Hole
Reeves kept banging on about this £22 billion “black hole” the Conservatives left. That’s why she had to raise taxes so much, apparently. Except the Office for Budget Responsibility disputed this, saying the hidden costs from her predecessor, Jeremy Hunt, were £9.5 billion. So less than half what she claimed.
That didn’t go down well. Made it look like she was exaggerating the problem to justify massive tax rises. Lost a lot of trust there.
The Winter Fuel Fiasco
Before the budget even happened, Reeves cut winter fuel payments for most pensioners. Just announced it suddenly in July with no warning. The government eventually U-turned despite positive public polling on the policy and it being widely supported by economists.
That set the tone really. Made her look panicked and like she didn’t have a proper plan. Not a great start.
What’s Happened Since?
Six months on and the fallout’s still happening. Farmers are taking legal action. Law firms are helping farmers take the government to the High Court over its decision not to consult with the sector over reforming inheritance tax.
All the UK’s major supermarkets voiced their support for a “pause” in the policy’s rollout pending a full review. That’s big. When Tesco and Sainsbury’s are telling the government to think again, that’s serious.
There’s talk of Reeves looking at even more tax rises. She’s potentially considering a cap on the value of gifts that can be passed on before death and potential changes to capital gains tax. People are calling it a “black hole” of up to £50 billion in the next budget.
Is that true? Oh mate. People are already furious. More tax rises will go down like a cup of cold sick.
Did She Break Her Promises?
Rishi Sunak stood up after the budget and said Labour had broken promise after promise. He characterised it as having “the fiscal rules fiddled and borrowing increased by billions of pounds”.
Labour says they didn’t technically break any promises because they didn’t raise the main tax rates. But come on. When you hit employers with £25 billion in extra NI, when you raid inheritance tax, when you whack VAT on school fees, that’s raising taxes on working people. Just indirectly.
Paul Johnson from the Institute for Fiscal Studies accused Reeves of further reducing trust in politicians. That stung because he’s usually quite measured. When the IFS is calling you out, you know you’ve got problems.
Will She U-Turn?
Short answer? Doesn’t look like it. The Treasury have made clear they aren’t going to budge on the inheritance tax policy. Reeves keeps defending it, saying it’s fair and only affects the wealthiest landowners.
But there’s been chatter about possible compromises. Some officials have looked at raising the threshold from £1 million to £5 million. Taking off the 50% relief for bigger farms. Various tweaks. Nothing confirmed, though.
My guess? She’s dug in too deep to back down now. It would look weak. Would undermine her whole budget. So she’ll stick with it even though it’s massively unpopular.
What Happens Next?
The Rachel Reeves budget was supposed to fix Britain’s finances and rebuild the country. Six months later, it’s caused more problems than it solved.
Farmers are still protesting. Businesses are still angry. Families are still worried about inheritance tax. And now there’s talk of even more tax rises coming.
Unless Reeves changes course, and there’s no sign she will, this is going to keep rumbling on. The anger isn’t going away. If anything, it’s building.
She’s got another budget coming. If she raises taxes again? Especially inheritance tax or capital gains tax? There’ll be riots. Not literally, maybe, but the backlash will be enormous.
Labour won a massive majority last July. They’ve got years left in power. But if they keep making decisions like this and ramming through unpopular policies without proper consultation, breaking promises technically while keeping to the letter of them, they’ll lose that goodwill fast.
And honestly? They already are. The polls have shifted. People aren’t happy. This budget is a big reason why.
Whether Reeves admits it or not, the Rachel Reeves budget has been a disaster for Labour’s reputation. Historic? Yeah. First woman chancellor? Absolutely. Good for the country? That’s a much harder sell.
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