Budget 2024: What is the Budget and how does it affect me?
- Published
Jeremy Hunt posed with his traditional red briefcase in Downing Street earlier
The government has set out its plans for how it will get and spend money.
Known as the Budget, it's worked out by the man in charge of Britain's finances - the Chancellor of the Exchequer, Jeremy Hunt - with help from his office, known as the Treasury.
It's something which usually happens at least once a year and this is the last scheduled Budget before the next general election - expected to take place this year - which is when adults vote for who they want to represent them in parliament.
You may have heard people talking about the Budget before, but what exactly is it? Read on to find out more.
What is the budget?
We all make budgets, but the one the government is responsible for affects us all
Similar to how you might work out what to spend with your pocket money, or what adults might decide to buy, depending on what they can afford - The government's budget is their plan on how to spend money but on a much bigger scale.
The government gets money in a few different ways, but mostly from taxes. This is money that a government gets from adults and businesses.
They then use this money to pay for things like hospitals, schools, the military and the police.
Taxes are one way the government can raise money to pay for things.
Adults pay tax on money they earn.
You might not realise it, but you also pay tax on things you buy, like food and drink, but this tax is often included in the price.
What's the government announced in the Budget today?
The chancellor has announced that national insurance will be cut by 2p from April, and says the average employee will end up with an extra £450 a year.
National insurance is a tax on the money people get from working. You normally start paying this when you turn 16 and earn over a certain amount of wages.
Tax helps to pay for things like state pensions for older adults who have retired, sick pay, care and maternity leave for parents - often mothers - who are off work looking after their babies.
But the government says that by cutting national insurance people will have more money to spend which they say is good for the economy.
The chancellor says the changes "make our system simpler and fairer, and will "grow our economy by rewarding work".
Income tax: Everyone in the UK who earns money has to pay some of that money to the government. Most people have to pay about a fifth, but people with more money pay more
National insurance: is a tax paid by most workers and is often an amount automatically taken from an adult's wages. The amount of National Insurance paid depends on how much an adult earns, and their personal circumstances.
VAT: You pay tax when you buy things. You may not realise it but 20% of the cost of many things goes to the government as VAT (Value Added Tax)
Duties: These are extra taxes charged on certain things like cigarettes, alcohol and petrol. Most of the money people pay for these goes to the government as 'duty'
Another announcement made by the chancellor included an extension of a fund for people struggling with cost of living pressures.
The Household Support Fund, which allows local councils to help families via food banks, warm spaces and food vouchers, will continue for another six months beyond 31 March, the date when it was originally scheduled to end.
The chancellor said that after listening to charities and MPs he has decided "with the battle against inflation still not over - now is not the time to stop the targeted help it offers".
However the announcement falls short of the 2 year extension that some charities had asked for.
What has been the reaction to the Budget?
Labour leader Keir Starmer called the Budget a "last desperate act" and says people are paying "more and more for less and less"
The cost of living crisis means that the price of things we buy - such as food, is still quite expensive.
That's because of something called inflation, which is high at the moment and can make it hard for people to afford things, especially if wages they earn from jobs aren't going up too.
Last month it was announced that the UK economy had officially entered recession at the end of last year.
A recession is a period where the economy doesn't grow because people aren't able to spend money and shrinks for two three-month periods in a row.
Jeremy Hunt says the UK economy will 'bounce back' and is now likely to grow faster than previously thought, but the opposition Labour leader Sir Keir Starmer said the budget was: "The last desperate act of party that has failed."
Shadow chancellor Rachel Reeves said on X, "The Chancellor's Budget has lifted the lid on fourteen years of Tory economic failure."
The economy involves making and buying products and services. You may have heard people refer to the economy, which often means a specific country's economy.
A 'strong' economy is generally one where there are lots of jobs, pay is high, and businesses are selling things and making money.
A 'weak' economy is one where people are losing jobs, can't afford things and businesses are struggling to make money.
How does the Budget affect me?
The Budget affects things like how much money is spent on schools
The Budget affects things like how much money is spent on schools and adults can find they have more or less money to spend depending on things like taxes or the financial help some families receive from the government.
Some parts of the Budget, such as defence spending, affect the whole of the UK.
Others, such as education, only affect England. This is because Scotland, Wales and Northern Ireland make their own decisions on this.
What's the Budget red briefcase?
The red briefcase has been a Budget day tradition since 1860
Usually on the day that the chancellor makes the Budget statement, you see them waving around a red briefcase. It traditionally contains the Budget speech and other financial documents.
The original red briefcase was first used by politician William Gladstone in 1860.
But in 1997 a new one was made as the old one was looking a bit tatty!
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