During the Covid pandemic, workers were allowed to claim a flat £6 a week to help cover additional household costs. This will now end. Only employers will be permitted to reimburse home working expenses tax free, leaving many remote staff with higher outgoings.
Announcing the decision in the Budget, Reeves said her plans would place the public finances on a sustainable footing while building what she described as “a fairer, a stronger, a more secure Britain”. She said the measures would help control inflation and support long term investment in major infrastructure projects.
The Chancellor has also created an additional £22 billion of fiscal headroom. Treasury insiders say this is designed to reduce speculation ahead of future Budgets and lower government borrowing costs.
“I said I would cut the cost of living and I meant it,” Reeves said. “This Budget will bring down inflation and provide immediate relief for families.”
Labour MPs and ministers welcomed sections of the statement as a shift towards the left, arguing that it has given Keir Starmer and Reeves political breathing space in the face of rumours about internal leadership tension.
“This shows we are a full blooded Labour government,” one senior strategist said. “In an ideal world welfare would have come first, but people expect us to make the argument. The wealthiest pay more and we protect those with the greatest need.”
However, not all members of the government were convinced. One minister said the Budget “does nothing to move the fundamentals” and missed an opportunity for bolder policies. Another told the Guardian that the statement “buys a few months with the backbenches and bond markets” but risks deepening frustration among some voters.
