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Rachel Reeves announces £40bn tax increase in UK Budget

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Rachel Reeves announces £40bn tax increase in UK Budget

UK chancellor Rachel Reeves has announced a £40bn tax increase, the biggest in a generation, with business bearing the brunt of a Budget she said would fix Britain’s “broken” public finances and public services.

Extra borrowing averaging £28bn a year over the parliament unsettled investors on Wednesday, pushing government borrowing costs — which had already risen sharply ahead of the budget — to a five-month high.

The decision to increase tax, spending and borrowing is a big gamble for Reeves, the first woman to hold the position of chancellor in the 800-year history of the post.

The massive tax rise, which will fund a big increase in spending on the NHS and schools, will take Britain’s tax burden to a record high. It was accompanied by a planned £100bn rise in capital spending — funded by the extra borrowing — over the parliament.

“These choices aren’t easy but they’re responsible,” Reeves told the House of Commons, to ecstatic cheering from Labour MPs. Conservative leader Rishi Sunak said she had “broken promise after promise”.

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Most of the tax increase will come from a £25bn rise in national insurance paid by employers, which will go up by 1.2 percentage points to 15 per cent from April. The level at which employers start paying NI for workers will drop from £9,100 to £5,000.

Business groups have warned that increasing NI for employers may force some companies to dismiss staff or close at a time when wages and other labour costs are also increasing.

About £9bn a year will be raised from higher taxes on groups including people who benefit from the “non-dom” scheme for wealthy foreigners’ overseas income, as well as private schools, energy companies and private equity chiefs.

As part of its move to abolish the non-dom regime, the government said it would end the use of offshore trusts to shelter assets from UK inheritance tax, ignoring warnings that such a move could spark an exodus of rich people from the UK.

The chancellor added that, instead of the scheme, the UK would introduce a new “internationally competitive” residence programme.

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Reeves announced an immediate increase in capital gains tax, with the lower rate rising from 10 per cent to 18 per cent, and the higher rate from 20 per cent to 24 per cent. She also said increases in inheritance tax — notably applying it to pensions — would yield £2bn a year.

In a move closely watched by private equity executives, she said Labour would increase the capital gains rates on carried interest to 32 per cent from April, up from 28 per cent.

While the change fell short of taxing carried interest in line with the top rate of income tax of 45 per cent, advisers warned that by suggesting there was a “compelling case” for further reforms of carried interest, Reeves had left the door open to further tax hikes.

In a boost to people at the other end of the income spectrum, the chancellor confirmed that the UK’s national living wage would rise by 6.7 per cent to £12.21 from next April, with a bigger increase for the youngest workers.

UK government bonds initially welcomed Reeves’ remarks, but began to sell off after the Treasury published figures showing debt sales will rise to £300bn in the current fiscal year, up from the previous estimate of £278bn and above investors’ expectations.

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The 10-year gilt yield climbed to 4.37 per cent from a low of 4.21 per cent during Reeves’ speech.

The benchmark FTSE 100 was trading down 0.6 per cent, while the more domestically focused mid-cap FTSE 250 was up 0.3 per cent, boosted by a rally in energy companies’ shares.

In a reference to the disastrous impact on bond markets from Liz Truss’s 2022 “mini” Budget, Vivek Paul, UK chief investment strategist at BlackRock, said pre-Budget briefings had “broadly had the desired effect on markets for now, with the reaction in gilt yields a far cry from the 2022 episode”.

The chancellor said the Budget would stabilise the public finances, patch up crumbling public services such as the NHS and pave the way for higher growth.

In total, she increased taxes by £41.1bn a year by the end of the forecast period in 2029/30 with spending — including capital investment — increasing by £74.1bn in the same year, leaving Reeves with a funding gap of £32.9bn.

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The independent Office for Budget Responsibility said the overall effect of Reeves’ Budget decisions would be to “push up CPI inflation by around half a percentage point at their peak”.

It added that real disposable income per person, a measure of living standards, will be 1.25 per cent lower by the start of 2029 than was forecast in March.

Reeves’ tax rise, one of the biggest in a Budget as a share of national income, outstripped the increases of her predecessors Rishi Sunak in 2022, George Osborne in 2010 and Gordon Brown in 2002.

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Tax as a share of GDP was forecast by the OBR to rise from 36.4 per cent this year to a historic high of 38.2 per cent in 2029/30.

Reeves announced a £6.7bn increase in capital investment in education, a 19 per cent increase in real terms on this year.

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She also promised a £22.6bn rise in the “day to day” health budget over two years, and a £3.1bn increase in the NHS capital budget, in what she described as the largest real-terms increase since 2010, outside of the Covid-19 pandemic.

But she said that she would not prolong a freeze on thresholds for personal income tax and national insurance beyond the 2028 date planned by the last government.

The chancellor maintained the UK’s long-standing freeze on fuel duty, but increased taxes on corporate jet use.

Pledging that the UK would not return to austerity, she said departmental day-to-day spending would grow by 1.5 per cent in real terms from next year, compared with the previously planned 1 per cent, in what remains a tight expenditure settlement.

Capital spending expenditure will grow by 1.7 per cent in real terms.

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In a combative Budget speech, Reeves said the previous Conservative government “hid the reality of their public spending plans” from the electorate and the OBR, the independent forecaster.

“Never again will we allow a government to play fast and loose with the public finances,” she told parliament. But Sunak said the OBR made no mention of the £22bn “black hole” that Reeves claimed to have discovered.

Reeves confirmed that the government’s new investment rule would define debt as “public sector net financial liabilities”, in a move that will increase scope for borrowing. She added that under the government’s new rules, net financial debt will fall in the third year of every forecast.

The OBR predicted the chancellor’s Budget would put her on track to meet her revised debt rule two years ahead of schedule, leaving her with £15.7bn room for manoeuvre.

Debt as measured under the previous rubric — underlying public sector net debt — is still set to increase throughout the parliament until the end of the decade.

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In forecasts accompanying the Budget, the OBR said that real UK GDP growth would be 1.1 per cent this year, 2 per cent in 2025, 1.8 per cent in 2026 and at 1.5 per cent to 1.6 per cent for the rest of the decade.

Additional reporting by Ian Smith and Harriet Agnew

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Who is Delcy Rodríguez, Venezuela’s leader after Maduro’s capture? | CNN

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Who is Delcy Rodríguez, Venezuela’s leader after Maduro’s capture? | CNN

Following the capture of President Nicolás Maduro during a US military operation in Venezuela, the command of the South American country has fallen into the hands of Executive Vice President Delcy Rodríguez.

That is what Venezuela’s constitution outlines in its different scenarios anticipating a president’s absence. Under Articles 233 and 234, whether the absence is temporary or absolute, the vice president takes over the presidential duties.

Rodríguez – also minister for both finance and oil – stepped into the role on Saturday afternoon. Hours after the capture of Maduro and his wife, Cilia Flores, she chaired a National Defense Council session, surrounded by other ministers and senior officials, and demanded the couple’s “immediate release” while condemning the US military operation.

Standing before the Venezuelan flag, Rodríguez said the early-morning operation represents a blatant violation of international law and Venezuela’s sovereignty. She added that the action must be rejected by Venezuelans and condemned by governments across Latin America.

“We call on the peoples of the great homeland to remain united, because what was done to Venezuela can be done to anyone. That brutal use of force to bend the will of the people can be carried out against any country,” she told the council in an address broadcast by state television channel VTV.

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Rodríguez, 56, is from Caracas and studied law at the Central University of Venezuela.

She has spent more than two decades as one of the leading figures of chavismo, the political movement founded by President Hugo Chávez and led by Maduro since Chávez’s death in 2013.

Alongside her brother Jorge Rodríguez, the current president of the National Assembly, she has held various positions of power since the Chávez era. She served as minister of communication and information from 2013 to 2014 and later became foreign minister from 2014 to 2017. In that role, she defended Maduro’s government against international criticism, including allegations of democratic backsliding and human rights abuses in the country.

As foreign minister, Rodríguez represented Venezuela at forums such as the United Nations, where she accused other governments of seeking to undermine her country.

In 2017, Rodríguez became president of the Constituent National Assembly that expanded the government’s powers after the opposition won the 2015 legislative elections. In 2018, Maduro appointed her vice president for his second term. She retained the post during his third presidential term, which began on January 10, 2025, following the controversial July 28, 2024, elections. Until the president’s capture, she served as Venezuela’s chief economic authority and minister of petroleum.

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Venezuela’s opposition maintains that the 2024 elections were fraudulent and that Maduro is not a legitimately elected president. They insist that the true winner was former ambassador Edmundo González Urrutia, a position supported by some governments in the region.

José Manuel Romano, a constitutional lawyer and political analyst, told CNN that the positions Rodríguez has held show she is a “very prominent” figure within the Venezuelan government and someone who enjoys the president’s “full trust.”

“The executive vice president of the republic is a highly effective operator, a woman with strong leadership skills for managing teams,” Romano said.

“She is very results-oriented and has significant influence over the entire government apparatus, including the Ministry of Defense. That is very important to note in the current circumstances,” he added.

On the path to an understanding with the US?

Hours after Maduro’s capture, and before Rodríguez addressed the National Defense Council, US President Donald Trump said at a press conference that Secretary of State Marco Rubio had spoken with the vice president. According to Trump, she appeared willing to work with Washington on a new phase for Venezuela.

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“She had a conversation with Marco. She said, ‘We’re going to do whatever you need.’ I think she was quite courteous. We’re going to do this right,” Trump said.

Trump’s remarks, however, surprised some analysts, who believe Rodríguez is unlikely to make concessions to the United States.

“She is not a moderate alternative to Maduro. She has been one of the most powerful and hard-line figures in the entire system,” Imdat Oner, a policy analyst at the Jack D. Gordon Institute and a former Turkish diplomat based in Venezuela, told CNN.

“Her rise to power appears to be the result of some kind of understanding between the United States and key actors preparing for a post-Maduro scenario. In that context, she would essentially serve as a caretaker until a democratically elected leader takes office,” the analyst added.

In her first messages following Maduro’s capture, Rodríguez showed no signs of backing down and, without referencing Trump’s statements, closed the door to any potential cooperation with the United States.

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Earlier in the morning, during a phone interview with VTV, Rodríguez said the whereabouts of Maduro and Flores were unknown and demanded proof that they were alive. Later in the afternoon, during the National Defense Council session, she escalated her rhetoric, condemned the US operation and, despite the circumstances, insisted that Maduro remains in charge of Venezuela.

“There is only one president in this country, and his name is Nicolás Maduro Moros,” said Rodríguez — now, by force of events, the most visible face of the government.

Reuters news agency contributed to this report.

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For those who help the poor, 2025 goes down as a year of chaos

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For those who help the poor, 2025 goes down as a year of chaos

Paul B. Miller shops at The Market food pantry in Logan, Ohio on Dec. 9. Food aid was just one of many services offered here that faced disruption in 2025.

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LOGAN, Ohio – Before dawn, in a cold, blustery drizzle, a line forms outside a small, squat building on an open stretch of road on the outskirts of town.

“My heater quit working in my car,” Scott Skinner says good-naturedly to the next man in line. “Man, what kinda luck am I having.”

The building is called “The Market” because it has a food pantry, but Skinner and the others are here to sign up for heating assistance. He’s been calling for a month to get an appointment with no luck, so he showed up an hour ago to snag a walk-in slot.

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The demand for help is more acute than usual because heating aid was suspended during the recent government shutdown. At the same time, SNAP food benefits were suspended for weeks, and some food pantry shoppers are still playing catch up.

One of those people is Lisa Murphy. She’s 61, disabled and relies on Social Security, and says it’s important to have “places like this that really help us.” 

“I still owe my gas bill. I owe $298,” Murphy says. “It’s hard to buy food and pay my bills, too.”

Lisa Murphy of Junction City, Ohio grocery shops at The Market at Hocking Drive on Dec. 9.

Lisa Murphy grocery shops at The Market food pantry in Logan, Ohio. She’s still behind on bills after SNAP food benefits were paused for two weeks during the recent federal shutdown.

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A detail from Miller's grocery cart; signs tell clients of the number of items that can be taken.

A detail from Miller’s grocery cart; signs tell clients the number of items that can be taken.

Rich-Joseph Facun for NPR

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But even as need grows with rising costs and unemployment, local anti-poverty groups like the one that runs The Market say their work has been threatened as never before amid the Trump administration’s funding cuts, pauses and reversals targeting a long list of safety-net programs. The shutdown was only the latest disruption that forced them to scramble to keep operating.

And, they say, the year of chaos has left deep uncertainty over which programs may be hit next.

‘Emergency response mode’

The Market in Logan, Ohio, is part of Hocking Athens Perry Community Action – HAPCAP for short – one of a thousand such agencies across the country that have been around since the 1960s. They connect some 15 million people with housing, health care, food aid and much more.

At HAPCAP, services include Meals on Wheels, Head Start, a public bus system, employment help, and a food bank that serves 10 counties across southeast Appalachian Ohio.

It’s an impressive range, but this year that’s also made it a big target for federal funding cuts. 

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“Eighty percent of our funding comes from federal grants,” says executive director Kelly Hatas. The “worst day” of her career was back in January, when the Trump administration ordered a federal funding freeze, saying it wanted to shift priorities and promote efficiency.

“When we got that news we were in immediate emergency response mode, like, what are we going to do?” she says.

Kelly Hatas, executive director of Hocking Athens Perry Community Action, talks with Amyrose McManaway, 3, of Haydenville, Ohio, while her parents grocery shop at The Market at Hocking Drive on Dec. 9.

Kelly Hatas, executive director of Hocking Athens Perry Community Action (HAPCAP), talks with the child of a couple who are shopping at the food pantry. Hatas says the nonprofit has had to scramble all year as various safety-net programs were hit with federal funding cuts or pauses.

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The most urgent threat was to six Head Start centers.

“Our Head Start director was on a call with all of her center coordinators telling them we’re laying everyone off tomorrow,” Hatas recalls. “And then there was some secondary information that was like, ‘Just kidding … Head Start is excluded.’”

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That whiplash shook people’s trust. And the hits kept coming.

In March, the administration canceled or paused a billion dollars that helped food banks. In May, President Trump’s budget called for zeroing out Head Start and heating assistance, along with major cuts to other safety-net programs like rental aid. He also proposed eliminating the $770 million dollar Community Services Block Grant that directly supports these anti-poverty groups, including it in a list of “woke programs.”

Congress eventually funded many of those programs, but the Office of Management and Budget took months to get out the block grant money. 

“OMB just decided not to spend it, totally usurping congressional authority,” says David Bradley, who advocates for these local groups with the National Community Action Foundation.

He says they’ve long had strong bipartisan support.

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“So we’ve had two major fights with the administration,” he says. “We won them because Republicans helped.”

An overview of East Main Street in Logan, Ohio on Dec. 9.

East Main Street in Logan, a small town in southeast Appalachian Ohio.

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In a statement, an OMB spokesperson said these anti-poverty programs fund “radically partisan activities, like teaching toddlers to be antiracist and ‘LGBTQIA+ welcoming.’” It also criticized a program that combined affordable housing with clean energy “in the pursuit of both economic and environmental justice.”

“President Trump ran on fiscal responsibility and ending wasteful DEI spending in government,” the statement says.“The American taxpayer should not be made to fund critical race theory.”

Health and Human Services spokesman Andrew Nixon said the agency “administers CSBG consistent with the funding levels Congress provides to support services for low-income families.”

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Funding chaos and uncertainty

In Ohio, Hatas says the state has shifted money to help address federal funding crises as they’ve popped up to keep programs going. But the biggest challenge remains uncertainty.

“The panic and the just day-to-day not knowing what’s going to happen, is just really difficult,” she says.

Because of that, HAPCAP has scaled back some plans, including for a new Head Start facility and a much-needed homeless shelter. It’s also had to pull out of food distribution at schools because of a lack of staff. Some employees are leaving, worried about losing their jobs. Others have been laid off or had their hours trimmed.

“It cut my paychecks completely in half,” says Kelsey Sexton, who manages the front desk but was shifted to part-time in the fall. “We have a mortgage, a car payment. With Christmas coming, my husband was like, what are we going to do?”

She was bumped back up to full-time – but so far only temporarily – after the shutdown pause in SNAP payments brought a surge of people to the food pantry.

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Losing a job can be extra tough in rural communities.

“We don’t really have jobs growing on trees … and so there’s nowhere for these folks to go,” says Megan Riddlebarger, who heads the Corporation for Ohio Appalachian Development (COAD) half an hour away in Athens.

Hocking Athens Perry Community Action Administrative Clerk Kelsey Sexton; Executive Director of Corporation for Ohio Appalachian Development Megan Riddlebarger.

Kelsey Sexton (left) had her hours as a desk clerk at HAPCAP cut in half. Megan Riddlebarger (right) heads the Corporation for Ohio Appalachian Development and says anti-poverty agencies are important for local economies in this rural region.

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She oversees federal funding for 17 antipoverty groups across the eastern part of the state, and says they’re important for rural economies.

“These aren’t just, like, people volunteering for fun,” she says. “These are some of the biggest businesses in town, buying most of the products that are bought and sold in the town.”

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Helping people stay warm and at home 

Down a flight of stairs from Riddlebarger’s office, five burly men at long desks take notes as Dave Freeman goes over how to properly install a water heater vent. It’s a refresher training class for inspectors, part of a weatherization assistance program the White House also wanted to end.

Freeman says many older homes in the area are full of cracks and crevices with almost no insulation.

“That house that you walk in (that) has the blanket at the stairway, so ‘Oh, honey, I haven’t been upstairs, it’s so cold up there,’” he says.

Weatherizing homes not only lets people live comfortably, it also saves them money.

“Say their electric bill goes down or gas bill goes down, they might be able to buy a pizza on a Saturday night,” Freeman says. “And that’s a big thing.”

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Adam Murdock, left, attends attends a training class for weatherization inspectors at Corporation Ohio Appalachian Development's Weatherization Training Center as training coordinator Dave Freeman, right, gives instruction, on Dec. 9, in Athens, Ohio. COAD is a non-profit that provides essential services like weatherization, energy assistance, childcare resources, senior programs and workforce development.

Adam Murdock (left) attends attends a training class for weatherization inspectors at the Corporation for Ohio Appalachian Development.

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But COAD’s funding for weatherization was delayed months, which jeopardized staffing. “You can get paid to do similar work in the private sector, and so retaining that staff is already a challenge,” says Riddlebarger.

Most of the agencies she oversees were able to cover the gap until money finally came through in November. But she says it means squeezing what’s supposed to be a year-long program into about half that time “with the same expectations for performance reporting.”

Diana Eads’ volunteer job with COAD – which includes a small stipend – was also at risk earlier this year, when the Trump administration gutted AmeriCorps grants with little explanation. As part of the AmeriCorps Seniors companion program Eads visits and helps out low-income people.

“My companions have been elderly, they’re not able to get out,” she says. “They’re just one-step away from nursing home care.”

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Diana Eads, 74, a volunteer for Corporation Ohio Appalachian Development, sits for her portrait at the COAD office on Dec. 9.

Diana Eads, 74, visits with elderly people as part of the AmeriCorps seniors program. When a funding cut threatened her small stipend for gas money, she told an 88-year-old woman who lives far away that she would keep visiting no matter what.

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If they were to land in a nursing home or assisted living, that could cost thousands of dollars a month in Medicaid spending. But Eads helps keep them at home for just $4 dollars an hour, to help cover gas or other small bills.

“Being rural, my one companion, it’s 56 miles roundtrip,” she says.

Riddlebarger managed to secure local philanthropic funding to keep operating, and after a legal challenge AmeriCorps federal funding was restored.

Through it all Eads reassured her companion, an 88-year old woman she’d been visiting for five years.

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“I told her no matter what happened, I would not stop visiting,” Eads says. “That was important.”

A grim 2026 outlook

After a year struggling to keep serving those most in need, advocates say they don’t see much relief in site. Republicans in Congress passed major cuts to Medicaid and SNAP food aid and those will start to take hold.

The Trump administration also is considering dramatic limits to rental assistance and has laid out major cuts to long-term housing for people leaving homelessness, a move that faces a legal challenge.

On top of that, the administration’s mass firings and buyouts hit hard in offices that administer various safety-net programs.

Anthony Waddell of Haydenville, Ohio enters the The Market at Hocking Drive on Dec. 9.

The Market runs a food pantry and helps connect people with other services. In December, people seeking an appointment for heating assistance often line up outside before dawn.

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Riddlebarger says most anti-poverty funding already falls far short of the need, and making it even harder to help people is exhausting.

“Not knowing which of our many services we are going to be able to keep operating makes us waste valuable capacity trying to plug holes that shouldn’t be holes,” she says. “We’re just breaking the wheel and reinventing it at a great cost to all parties.”

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‘Bomb cyclone’ forecasted to bring heavy snow, blizzard conditions and dangerous travel

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‘Bomb cyclone’ forecasted to bring heavy snow, blizzard conditions and dangerous travel

People walk through the snow in Brooklyn after an overnight storm on Saturday in New York City.

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An intense cyclone system is fueling a mix of severe weather, including a winter storm that will impact upper parts of the United States.

Heavy snow, blizzards, extreme cold and damaging winds are likely to create hazardous conditions stretching from Montana east to Maine, and Texas north to Pennsylvania, according to the National Weather Service (NWS).

More than eight million people were under winter storm warnings from the NWS on Sunday afternoon. Nearly two million people were under blizzard warnings. Meteorologists warn that after winter weather Friday and Saturday, an arctic front clashing with warm air could rapidly intensify into a ‘bomb cyclone’ over the Midwest and Great Lakes through Monday. A ‘bomb cyclone’ or bombogenesis is a rapidly deepening area of low pressure that creates harsh weather conditions.

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“We are anticipating some pretty big snows over the next 24 hours, especially across east central Minnesota to northern Wisconsin to the Upper Peninsula of Michigan. A lot of those places will have 6-12 inches,” NWS Lead Forecaster Bob Oravec told NPR on Sunday.

Blizzard conditions will cause near zero visibility and possible power outages Sunday night though Monday evening in some locations in Michigan’s Upper Peninsula, according to the NWS Marquette. A foot of snow or more is possible in areas along Lake Superior with 40 to 65 mile per hour winds, according to forecasts.

Marquette Mayor Paul Schloegel told NPR on Sunday the Marquette Board of Light & Power is prepared to handle any loss of electricity. He said in an email the main priority is keeping people safe.

“We tend to heed the advice of our weather forecasters and prepare to hunker down as needed,” Schloegel wrote. “As far as taking care of the snow, our extremely dedicated public works and MDOT crews do a great job taking care of our residents, they are true professionals. Roads are usually back to normal within 24 [hours].”

Schloegel said Marquette residents appreciate a good blizzard while taking precautions.

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“We choose to live here for our love of [four] full seasons and appreciate the effect the greatest lake, Lake Superior, has on our climate,” he said.

Minnesota is also bracing for major impacts. Blizzard and winter storm warnings and advisories are in place for most of the state. As much as 10 inches of snow could fall in the Twin Cities and potentially life-threatening travel conditions are likely through early Monday morning, according to the NWS.

The ‘bomb cyclone’ is also sending cold temperatures below freezing.

Residents of Havre, Mont., about 45 miles south of the Canadian border, could feel wind chill values as low as 15 degrees below zero late Sunday. The actual temperature is forecast to fall to 2 degrees below zero.

Farther south in Dallas, Texas, temperatures are expected to drop dramatically from the 80s on Sunday to highs in the 40s on Monday, according to the NWS.

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In the Northeast, freezing rain could cause travel problems, including icing in northern New England and northern New York state, late Sunday into Monday, according to Oravec.

When colder air moves into New York City early this week, remaining snow on the ground from the weekend storm will freeze and create further hazardous travel conditions, Oravec said.

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