On the 26th of November 2025, Labour Chancellor, Rachel Reeves, delivered a landmark budget, tackling the cost of living, investing in public services and reducing the national debt. Fairness is at the heart of the budget. Building on last year’s budget, this budget continues to show the difference a Labour Government makes.
After years of decline under successive Conservative governments, the country is turning a corner. The economy has grown, wages are rising, and inflation is coming down.
We have beaten the OBR’s economic growth forecast, with growth upgraded to 1.5 per cent; interest rates have been slashed five times since we took office, and energy bills will fall by £150 on average next year. Rail fares will be frozen for the first time in 30 years, and UK net migration has dropped by 80 per cent from its peak in 2023 under the previous Tory government. These are Labour choices, and they are choices that are delivering for working people.
The terrible economic inheritance we inherited on entering government meant we had to rebuild the country’s economy on a stable, investment- and reform-focused foundation. And thanks to the decisions this Government took in the last budget, we have restored economic stability.
We have been honest about the challenges we face. The damage from 14 years of austerity cannot be fixed overnight, which is why we have asked everyone to make a fair contribution. Income tax thresholds will remain frozen for three more years. It is not a decision we have taken lightly, but it is a necessary one. And we are making sure that the wealthiest pay the most.
We are reforming the way that property, savings and dividends are taxed so that landlords no longer pay less tax than their tenants; and we are introducing a high-value council tax rate of £2,500 per annum on mansions worth over £2 million, rising to £7,500 for properties worth more than £5 million. These reforms mean a fairer tax system that delivers vital revenue to invest in the public services we all rely on.
Because of the decisions we have taken, we can make the changes that matter the most.
We are scrapping the two-child limit in full from April 2026, ending a reckless Tory policy that plunged hundreds of thousands of children into poverty.
By removing it, we will lift 450,000 children out of poverty across the country. That means 69,000 children across Wales, and an estimated 3,070 children in Cardiff East.
It is a stain on the country that by the time children start reception class, their unequal life chances are already baked in. It is completely unacceptable that children are penalised at the beginning of their lives for decisions that are not made by them.
The latest report from the Bevan Foundation shows that progress is being made. The number of parents reporting that their children faced reduced meal sizes or skipped meals entirely has fallen from a peak of 21 per cent in 2023 under the Tories to 13 per cent this year under this Labour government. These figures show that we are moving in the right direction, but we are under no illusion that there is still work to do. That is why lifting the two-child cap is so important. Combined with other measures, this Labour government will deliver during this parliament the biggest fall in child poverty on record. Only a Labour government does that.
We are not stopping here. This year, we are once again increasing both the National Minimum Wage and the National Living Wage. For 18 to 20-year-olds, the minimum wage will rise from £10.00 to £10.85 per hour, an annual increase of around £1,500 for full-time workers. The National Living Wage will increase from £12.21 to £12.71 per hour, boosting gross annual earnings by approximately £900 for a full-time worker. These changes will benefit 160,000 workers in Wales. This comes on top of last year’s annual increases of around £1,400 for full-time workers on the National Living Wage and a £2,500 annual increase for 18–20-year-olds on the minimum wage.
On vehicles, we are reforming taxes to make them fairer and greener. Electric vehicles will pay a small excise duty based on mileage, helping us transform our road network. And we are ending unfair practices in the taxi industry to improve competition.
We are also reforming the Motability scheme to ensure it serves its original purpose, removing luxury vehicles and saving taxpayers money. We will also reform the scheme by requiring Motability to purchase more UK-manufactured cars. This is about ensuring that support goes where it is needed most.
On pensions, we are renewing our commitment to the triple-lock by increasing the basic and new state pension by 4.8 per cent. Any pensioner whose sole income is the state pension will not be required to pay the income tax that arises from reaching the income tax threshold.
We are also addressing injustices suffered by the British Coal staff superannuation scheme pensioners by transferring the £2.3 billion reserve fund to its members, which will increase pensions for 4,000 pensioners in Wales. And we are indexing pensions in the protection fund to inflation, so no one loses out due to insolvency. This will benefit 11,000 Welsh pensioners, including Allied Steel and Wire pensioners in Cardiff East.
From the introduction of the Hillsborough Law to compensating victims of infected blood and sub-postmaster scandals, Labour will always stand on the side of justice.
On defence, in an age of increasing global insecurity, we will maintain our commitment to NATO, with defence spending rising to 2.6 per cent of GDP by April 2027. We will continue to stand by our allies.
We have delivered our manifesto promise to make positive changes to the Welsh Government’s funding framework. These changes and additional funding direct from the UK Labour Government mean that the Welsh Government will have nearly a billion pounds extra spending power for the NHS, schools, transport, local councils and business support.
With two record-breaking funding settlements, the largest in devolution history, in just seventeen months, the benefit of two Labour governments for people in Wales is clear. A total of nearly six billion pounds more in spending power. We have ended Tory austerity, and we are investing in our people, public services and businesses.
We’re also backing Welsh industry with generational investment, including £10 million for the world-leading South Wales compound semiconductor cluster and £4.2 million to clean up land near the Celtic Freeport in Port Talbot, to attract new businesses, jobs and investment.
Anglesey will benefit from £25 million for its Freeport and £2.5 billion, one of the largest public investments in Welsh history, the UK’s first Small Modular Nuclear Reactor fleet at Wylfa, 3,000 jobs and will produce enough to power all homes in Wales twice over.
Two AI Growth Zones, one in North Wales and the other in South Wales, will create more than 8,000 high-skilled jobs, and through the Local Growth Fund, Wales is also receiving over half a billion pounds to drive job creation and regenerate communities.
I was really pleased to hear from the Chancellor, confirmation that the UK Labour Government recognises the importance of the jobs and economic growth potential of Cardiff Parkway and will work with the Welsh Government and the private investors to deliver Cardiff Parkway, a project that will connect residents in Cardiff East to the city centre in minutes, boosting connectivity and unlocking huge opportunities for local people and businesses across Cardiff East.
This Budget is the result of two Labour governments working hand in hand; delivering investment in Cardiff East and Wales’s future whilst tackling the issues that matter most to people today.
We have all seen the bleak alternative. Three years ago, in Liz Truss’s disastrous mini-budget, the Tories crashed the economy, sent mortgage rates spiralling and brought pensions to the brink overnight. They doubled the national debt and left our vital public services in ruins. Now they are proposing £47 billion of cuts to public services, the equivalent of firing every police officer twice over.
Reform offers £100 billion of spending cuts with no detail about which schools, hospitals, transport networks or council services will be cut.
Plaid and the Greens offer fantasy economic policy with no grounding in reality. Plaid still hasn’t explained which taxes they would raise and which public services they would cut to fund their plan for independence. That plan will cost every single person in Wales £7,000 every single year.
This Labour Budget is about renewal.
It is about building a country where living standards rise, child poverty plummets, and vital public services are rebuilt from the ruins.
After 14 years of decline, Labour is delivering the change the country voted for. These are Labour choices taken with Labour values at heart, and they are the right ones for Cardiff East, Wales, and the whole of the United Kingdom.