It was a big day for the Chancellor of the Exchequer, Rachel Reeves. Possibly one of her most scrutinised days while in office, almost a sink or swim moment. It didn’t start well, as around 12.12pm, eighteen minutes before the Chancellor was set to make the Budget statement to Parliament, the Office for Budget Responsibility, the Government’s independent economics watchdog, accidentally posted the whole Budget online.
Reeves was visibly furious and quick to stress that this was not her fault or the Government’s, but the OBR’s. For the first twenty minutes of her speech, it felt as though many MPs were not fully listening. Everyone already knew what was coming. There was a lot of screaming, roaring and jeering. At times it was hard to understand what Rachel Reeves was saying.
Whether she has won over the country is still up for debate. Early reactions suggest a mixed verdict. What is clear, however, is that this years Budget has attracted less criticism than last year’s, when changes to inheritance tax and national insurance caused particular concern for farmers and small businesses.
A Handout or a Lifeline?
However, the Chancellor has had to eat her words today. During last year’s general election campaign, Labour pledged that they would not increase taxes on working people. Now, in this new budget, taxes have risen, pushing the overall tax burden higher. Even so, Reeves announced some popular measures, or U-turns, including scrapping the widely criticised two-child benefit cap, a policy introduced by the Conservative Party in 2017. This means that parents will once again be able to claim benefits for more than two children, putting more money into the pockets of the poorest families.
The Treasury also claims that the scrapping of this policy will lift 450,000 children out of poverty, including 95,000 in Scotland. The Chancellor also confirmed an increase to Universal Credit of 6.2% , meaning it will go from £92 to £98 per week for single people. And for couples, it will rise from £145 to £154 per week. Kemi Badenoch, the leader of the Tory Party, criticised the Chancellor, dismissing Reeve’s welfare giveaways as “a budget for Benefit Street”.
A Minimum Wage Rise, a Stealth Tax and the Risk of Pricing Students Out of Jobs.
Minimum wage was another major part of the Budget. Reeves confirmed that the minimum wage for 18 to 20-year-olds will increase from £10 to £10.85 an hour, and for over 21s it will rise by 50p an hour to £12.71. Currently, before tax, a 19-year-old working 20 hours a week while studying earns around £800 a month. From April, that will rise to £868. Older students earning £976.80 a month will see their pay rise to £1,016.80 before tax. It is not a huge increase, but the Chancellor would argue that it puts money in people’s pockets at a time when the living costs remain high.
Students might believe this is great news, but there is another side to consider. Higher minimum wages may also price some young people out of jobs. Young workers are often seen as less experienced and if it becomes more expensive for businesses to hire them, employers may look instead to older candidates with more experience for the same wage. Many will now be asking whether it is better for young people to earn slightly less, but have more opportunities to gain experience, or to earn the same as experienced adults, but face fewer job opportunities.
Another issue for young workers is the freeze on income tax thresholds. The “thresholds” are the levels of income you can earn before you start paying tax. Normally, these go up each year to keep pace with inflation, so people don’t end up paying more tax just because wages have risen. But this year the Government has frozen those thresholds, meaning they will stay exactly where they are.
For students, this matters more than it might sound. If your wage goes up but the threshold stays the same, you can end up paying tax sooner than you would have before. In other words, some of the extra money from the minimum wage rise could be quietly taken back through the tax system. For students who are only just starting to earn above the tax-free allowance, this could mean that the benefit of a high hourly wage is smaller than it first appears.
Cutting Energy Bills
The Chancellor also announced that energy bills will fall by £150 from April 2026. She explained that this would not come from reducing energy prices directly, but from scrapping the Energy Company Obligation – a government-mandated scheme that requires energy suppliers such as Octopus and SSE to pay for insulation and energy efficiency upgrades in low-income and vulnerable households.
At the moment, the cost of this scheme is added to everyone’s energy bills, so removing it will bring bill costs down. It does, however, raise the question of who will cover the cost of these improvements in the future, which is likely to be from taxation. For students living in private rented accommodation, particularly in the city centre, this could translate into a small drop in heating costs next spring.
What are our local representatives saying?
Local representatives offered differing responses to the Chancellor’s Budget. Stirling’s Labour MP Chris Kane told Brig that he “welcomes the Chancellor’s Budget,” pointing to measures such as scrapping the two-child benefit cap, raising the minimum wage and reducing energy bills. He said these steps would “lift around 450,000 children out of poverty, including 95,000 here in Scotland.” Kane also noted that Scotland will receive £820 million extra in Barnett consequentials and said it is now up to the Scottish Government “to protect local services and deliver for our communities.”
SNP councillor Josh Fyvie, who represents Stirling East, offered a much more critical view. He told Brig that the rise in the minimum wage for under-21s is “long overdue,” but argued that young people have been “underpaid in the first place because Labour created age-based wage discrimination and then joined the Tories in a decade of austerity that squeezed wages and opportunity.”
He also criticised the two-child benefit cap, saying it had pushed “children in my ward into poverty,” and welcomed its removal. On the £820 million going to Scotland, Fyvie said this was “not Labour doing Scotland a favour,” but simply Scotland receiving its population share of UK spending. He highlighted Scottish policies such as the Scottish Child Payment, free university tuition, expanded childcare and free prescriptions as examples of support that he says “actually reaches families in need” in Stirling.
In Conclusion
As ever, the impact of this Budget will become clearer in the months ahead. For Scots, more so after the 13th of January, when the Scottish Finance Secretary, Shona Robison, sets out the Scottish Government’s Budget in the Scottish Parliament. For students, the headline announcement of higher wages, lower bills and the end of the two-child cap may offer some breathing room, but tax freezes and uncertainty for young workers complicate the picture.
What is clear from local representatives is that there is little agreement on whether the Chancellor has delivered meaningful change for communities like Stirling. With Holyrood’s decisions still to come, students will now be looking at the Scottish Government for clarity on what support is coming next.
Featured Image Credit: UK Government via Wikimedia Commons
Second-year Politics student with a focus on news, current affairs and in-depth features. Passionate about exploring complex issues with clarity, balance and impact.
