Budget 2025: Sticking by their rules, finding money between the lines.

Facing a tall order of tasks – from rising debt and reducing the notorious black hole in the public purse to abiding by her own fiscal rules – it was clear that the chancellor was walking a tightrope.

Backlash to the prospect of more tax rises dominated much of the discussion in the preceding weeks – in part fuelled by several u-turns and a mixed message from the government.

“Growth”, appearing 367 times in last Budget Red Book, is central theme of the government’s aims – although there was only room for a paltry 279 mentions in this year’s edition.

In what many describe as a stagnant first 18 months for the Labour government, the chancellor recognises that spending now has become ever more crucial to deliver growth.

Accelerating critical infrastructure delivery and turbocharging industrial output is integral to the government’s growth mission. Though with much of the government’s core strategies to achieve this already announced throughout the year, it was no surprise to see it on the sidelines in this Budget.

Nonetheless, the chancellor’s opening gambit reinforced how vital capital spending into development is to get the country moving forwards.

In addition, the announcement for £891 million of funding for the Lower Thames Crossing is welcome news, as well as confirmation that the government will publish its White Paper on water reform before year’s end.

In a move to spark growth and support in the regions, £13 billion of flexible funding is being allocated to seven Mayoral Strategic Authorities – overseeing 40 per cent of England’s population – and available for boosting development in skills, business support and infrastructure.

Further investment and commitment towards the Northern Growth Corridor, Northen Powerhouse Rail, and the TransPennine Route Upgrade, as well as the Leeds City Fund affirm the government’s willingness to deliver for communities feeling overlooked in recent decades

With the government facing increased political challenges from both within and outside Labour’s base, its commitment to deepening devolution appears to be one of its solutions to build up support and show itself as a government listening and delivering for all.

While freezing tax thresholds will be the biggest financial catch for the chancellor, she also introduced a range of measures aimed at securing a few hundred million here and there, from expanding the sugar tax to include dairy-based drinks to freezing fuel duty.

Among the string of new measures was the introduction of the so-called ‘mansion tax’ – a new annual surcharge for properties valued over £2 million to be applied across four bands.

Expected to affect less than one per cent of UK properties, the new levy remains consistent with the government’s approach to aim to raise as much revenue from as small a pool as possible. The impact of this new tax will mostly be felt by homeowners in London and the Greater South East.

The move however opens the door for further criticism of the government’s disregard for ‘cash-poor, asset-rich' individuals. This was brought to life again on a day where tractors lined the streets of Westminster, a symbol of farmers’ protest to incoming inheritance taxes on agricultural land.

Rachel Reeves declared that her decision to scrap the ECO energy efficiency scheme for homes and remove certain policy levies from bills will deliver average savings of around £150 per household annually and possibly reach £300 for lower-income families.

Removing the scheme, however, sends a mixed message about the government’s commitment to decarbonisation and promote the green economy.  Coupled with a new pay-per-mile tax for electric and hybrid vehicles, the chancellor’s Budget could amplify the debate between affordability today and sustainability tomorrow.

The chancellor reiterated throughout that this Budget abided by her fiscal rules.  A deft act given the pressures and challenges faced. Nonetheless, it, and the government’s success will be defined by whether it can boost growth both in the short and long term, all while improving living experiences and conditions for millions across the country.

Her commitment to assessing the fiscal rules once a year – at the Budget – will be welcome news for businesses hesitant to make significant investment decisions given the multitude of major political and fiscal milestones in recent years. Whether this delivers the confidence they need can only be answered in the months and years ahead.