The UK’s first female chancellor, Rachel Reeves, announced a series of tax hikes last October that would fund investment in public services including schools and the NHS.

In the newly elected Labour Party’s first budget since 2010, Reeves has promised to “put public finances on a clear trajectory”, while claiming to be both “pro-worker” and “pro-business”. Issuing a budget she said she does “not want to repeat”, she has legislated a near-record £40bn tax hike, promising to plug the alleged £22bn “black hole” that Labour claims was left by the previous Conservative governments.

Reeves has conceded that her budget will bring temporary pain, but maintains this is all in line with her consistent goal of rebuilding the UK economy. But what does this budget actually look like, and what does it mean for Britain’s path forward?

Referred to by Reeves as a “budget for growth”, the brunt of it will be borne by employers as its biggest change is the raising of employers’ National Insurance (NI) contributions by 1.2% to 15%, effective from April. Though this change alone raises £20bn, this will not be without consequence for employees, as many will likely have to forfeit pay rises, and employers will also be less able to create jobs.

Businesses have been further hit by the lowering of the NI threshold for each employee falling from £9,100 to £5,000.

Community and voluntary organisations warned in December that the NI hikes will put them “on their knees”, with some groups potentially having to reduce their frontline services.

Reeves has also increased the bus fare cap from £2 to £3 in much of England while choosing to continue to freeze fuel duty. Environmental campaigners, including Caroline Lucas, former leader of the Green party, have heavily criticised the decision to freeze fuel duty and “penalise bus users”, calling it “utterly nonsensical”. The move also contradicts Labour’s pledge to “accelerate the move to greener transport” and scale back reliance on “volatile fossil fuels”.

Govt decision to keep regressive Tory fuel duty freeze & to choose to penalise bus users is utterly nonsensical. What happened to promoting public transport? And all the Green rhetoric? Cost of capping bus fares at £2 tiny compared with revenue lost through freeze #Budget2024

— Caroline Lucas (@CarolineLucas) October 30, 2024

According to leading think tank the New Economics Foundation (NEF), keeping the £2 bus fare cap would have cost a tenth of the money spent by the government on freezing fuel duty. £3bn will be spent on freezing fuel duty while the bus fare cap would have cost £300m.

The NEF also previously found that freezing fuel duty could lead to “an increase in emissions equivalent to putting an extra two million cars on the road”, and will benefit the richest 10% of households three times more than the poorest 10%.

Another group that is vastly dissatisfied with Reeves’ budget are farmers. From April 2026, inherited agricultural assets worth more than £1m, which were previously exempt from tax, will be charged at 20% (half the usual rate).

The government says most farmers will not be affected, while farmers claim that smaller, family-owned farms will not be able to survive. They say they feel underappreciated and that their economic futures have been thrown into jeopardy, and there have been widespread protests.

What is the government promising?

As for how the budget will be used, Reeves has promised a £70bn boost in spending and an end to more than a decade of austerity kept in place by Conservative governments.

The minimum wage is set to rise to £12.21 an hour in April, and NHS funding will increase by 4%, with Labour promising 40,000 extra appointments and operations a week. There will also be an extra £1bn of spending on children with special educational needs and disabilities (SEND), which comes out of the £2.3bn total increase on core school spending.

Hundreds of schools in England are still at risk from crumbling concrete, after the presence of reinforced autoclaved aerated concrete (Raac) was confirmed at 235 Department of Education sites. Although Reeves has promised £1.4bn for the existing rebuilding programme for schools and colleges in 2025–26, the funding does not cover any new projects in the future.

What does the future look like? The Office for Budget Responsibility (OBR) has diagnosed a short-term economic boost, but long-term inflation and growth in interest rates hindering the pledged growth, leaving the economy “largely unchanged in five years”.

Reeves’ success as chancellor, as well as Britain’s economic success, relies on outperforming this forecast.