Chancellor Rachel Reeves failed to deliver on her promise to focus on growth in a Budget that lacked ambition, according to the leader of a think tank.
Helen Miller, director of the Institute for Fiscal Studies (IFS), said there were “bright spots” in the Budget, such as the increase in fiscal headroom and measures to ease child poverty, “but beyond that, I can’t help but feel underwhelmed”.
Presenting the IFS’s analysis of yesterday’s statement, Ms Miller said: “This was undoubtedly a big Budget in terms of the numbers involved. How could it not be when tax revenues are now £38 billion higher in 2029–30 than previously expected?
She said that a large part of this was aimed at the chancellor doubling her headroom to £22bn, for which she “deserves credit”.
Ms Miller added: “It means that it will require a larger shock to blow the chancellor off course. This in turn should mean that we can expect a period of greater stability and more muted policy speculation.
“But it’s not a Budget that feels particularly big on ambition. At least not relative to the scale of the challenges we face.”
She added:”I hope this is a government able to deliver on its plans. But I have my doubts.”
Ms Miller said the government had identified growth as its number one mission and that at the last Budget Ms Reeves had said that ‘Every Budget I deliver will be focused on our mission to growth the economy’.
Ms Miller said: “That wasn’t on show yesterday,” adding that “tax reform was the way to ensure that taxes don’t do more damage than necessary”. She said the Chancellor, like her predecessors, continues to shy away from meaningful tax reform that could move the dial.
“This felt mostly like the Budget of a government trying to scrape through. Of course, no fiscal event can do everything, and reform is hard. But given the scale of the challenges we face, and given the government’s lofty rhetoric about change, and its ambitions on growth, I think we’re entitled to ask for more.”
Scottish tax thresholds to be unchanged
Scottish Finance Secretary Shona Robison said she “wants to give certainty for the remainder of this parliament” that there would be “no changes to rates and bands” in Scotland.
The income tax threshold freezes in the rest of the UK “will not impact on the Scottish budget next year because they were already confirmed to April 2028 and the extension of that won’t impact until the 2028/29 budget”.
She also confirmed that the estimated annual savings to the Scottish Government of no longer mitigating the two-child benefit cap (around £120m) will all be used for “the most impactful levers” to tackle child poverty.
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