Budget 2025 live: Rachel Reeves announces £26bn tax rises and scraps two-child benefit cap after OBR leak

Rachel Reeves has refused to rule out coming back for more tax rises, saying: “I can’t write future budgets”.

The chancellor broke a promise she made last year to not come back for more.

Explaining her decision to go back on her word, she said: “Last year, I had to fill the £22bn black hole in the public finances. What we didn’t know then was that actually productivity growth was weaker than the OBR had forecast”.

She added: “I believe we can beat those forecasts… the Conservatives’ legacy is not our country’s destiny but we also all know that if you ignore the forecasts you pay a huge price in the cost of government borrowing.”

Challenged on whether she could have gone further in taxing the wealthy, Rachel Reeves said: “From 2028 we freezing thresholds for a bit longer, and that does have a cost.

“But we’re putting money now in the pockets of working people with £150 off their bills, money off of rail fares and frozen prescription charges, as well as fully funding the childcare offer of 30 hours of free childcare for preschool children, more free school meals for half a million kids, as parents are on Universal Credit rolling out, universal breakfast clubs, all primary schools – all these things are putting money in the pockets of of ordinary working people, as well as the increases in the national minimum wage and the national living wage.

She said it was a highly progressive budget.

Rachel Reeves has admitted that freezing income tax thresholds will leave workers paying more tax.

“I do recognise that we’re asking ordinary people to pay a bit more”, Ms Reeves said – but dodged a question about whethershe should resign over her manifesto pledge break.

Asked whether she should resign, the chancellor said: “I do recognise that is asking ordinary people to pay a little bit more, but I’ve managed to keep that contribution as low as I possibly can by closing loopholes and asking those with the broadest shoulders to pay more.”

Pressed on whether she would acknowledge the income tax threshold freeze was a breach of the manifesto, she said: “If you read the manifesto, we’re very clear.”

The OBR says the tax take will reach “a historic high by the end of the decade” after Rachel Reeves’ Budget.

The official spending watchdog described it as a “policy risk” from the government.

The move “delivers most of the government’s deficit reduction”, the group said.

But, it added, there was a risk that a rising tax take distorts or constrains activity – meaning that the actual amount raised in tax is less than expected.

Poverty campaigners have welcomed the cut in energy bills but said Rachel Reeves’s moves do not go far enough.

Households are set to receive an average £150 cut in energy bills, following government changes to energy levies.

Simon Francis, of the End Fuel Poverty Coalition, said the government was right to invest in the Warm Homes Plan to help improve energy efficiency.

But he said: “Even with the changes announced, we expect that from April 2026 average energy bills will still be hundreds of pounds higher than they were in winter 2020-21 and £97 higher than at the General Election.

“The millions of households who will still be struggling with the cost of energy need further bold action from the government in reform of energy pricing, targeting energy bill support at those who need it, delivering on a new fuel poverty strategy and in creating an ambitious Warm Homes Plan to upgrade cold, damp homes.”

The government has claimed again that it has delivered 5.2 million extra NHS appointments since the general election.

As Full Fact explains in its Government Tracker, it’s true that there were 5.2 million additional NHS appointments in England between July 2024 and June 2025 compared with the year before (once the data’s been adjusted to standardise the number of working days). But that doesn’t tell the full story.

Historic NHS data shows that by recent standards, 5.2 million extra appointments in a year isn’t a particularly large rise. The equivalent figure the year before, under the Conservatives, was 6.5 million.The number of NHS appointments has been rising for a long time, as it has to, to meet the health needs of a growing and ageing population.

The lack of mention of measures to help the care industry has come under fire.

The RNIB said thousands of blind people would be stuck waiting many months for vital support.

Vivienne Francis, of the RNIB, said: “We’re glad the government listened and is rethinking the core plank of its disability benefit reforms, but we are hugely concerned about the deafening silence around adult social care services.

“Already local councils don’t get the resources and guidance needed to provide essential vision rehabilitation services to people coming to terms with sight loss.”

Jane Townson, chief executive of the Homecare Association, said this Budget was a missed opportunity.

“The Chancellor spoke repeatedly about cutting NHS waiting lists, yet failed to recognise that without adequate homecare, people will continue to be stuck in hospital beds when they could be recovering at home.

She welcomed the National Living Wage increase but added: “Local authority fee rates must rise to match, or providers simply cannot afford to pay the new minimum wage, let alone offer the competitive salaries needed to attract and retain staff.

“The announcement of Neighbourhood Health Centres is promising in principle, but community-based care cannot function without homecare workers. We urge the Government to bring forward the social care reforms it has promised.”

No Budget measures will boost growth, the Office for Budget Responsibility says.

And in fact the tax changes could reduce output, the OBR says in its report.