UK Budget 2025: Rachel Reeves annoyed opponents, but pleased Labour MPs and placated the markets
The run-up to Rachel Reeves' budget last week was doom-laden and chaotic - but on the day it turned out to be what commentators described as "very much a traditional Labour Budget".
Despite much earlier speculation about the possibility of her breaking an election pledge by raising the basic rate of income tax, there was no such move.
The Chancellor's headline announcement was the scrapping of the two-child benefit cap which was widely welcomed by Labour MPs, anti-poverty campaigners and others, who had long argued it was the single most effective step to lift children out of poverty.
There was also £150 off energy bills and a freeze on both rail fares and prescription charges in England. Meanwhile, tax rises included a new levy on houses worth over £2m and a gambling tax, as well as a new pay-per-mile charge for electric vehicles.
In the absence of that manifesto-breaking rise in income tax rates to denounce Ms Reeves for, opponents have made great play of the freezing of the tax thresholds, which will see many people drawn into paying more tax.
But this so-called "stealth tax" was an extension of a measure pioneered by the Tories. When Rishi Sunak, as chancellor, froze tax thresholds in 2021 one right-wing paper described it as a "technical issue". There is no such lenient view taken for Labour now.
And critics have seized on the rising welfare bill - due to previous U-turns on benefit cuts and winter fuel payments, as well as the scrapping of the two-child benefit cap - for easy headlines about "A budget for Benefits Street paid for by working people".
But such simplistic sloganising, and the resort to hackneyed prejudice about “workers v shirkers” or “strivers v skivers”, ignores the fact that a huge proportion of people on benefits are also workers, but are not paid enough by their employers to have a basic standard of living.
Despite the criticisms, it is still impressive that Rachel Reeves managed to please her own backbenchers, placate the bond markets and increase her “headroom” - the leeway she has for future unexpected costs - all at the same time.
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