Last Wednesday was a historic moment. When Rachel Reeves stood in the House of Commons, not only was she delivering the first Labor budget in 14 years, but she was also becoming the first female Chancellor of the Exchequer to do so in our country’s history.

It was also historic because it set a new direction for Britain’s struggling economy: rejecting austerity and favoring growth and investment.

Let’s break down what this means for UNISON members.

Will this help combat cost of living pressures?

The minimum wage has been significantly increased. One of the Government’s commitments was to require the Low Pay Commission to take into account the cost of living when setting the rate and begin to reduce the gap between age groups. In her Budget, Ms Reeves said the national living wage would rise by 6.7% to £12.21. For younger workers aged 18 to 20, it rises even faster, from £8.60 to £10.

Budget documentation shows the pay review body’s process began in September, three months earlier than for 2024/25, to ensure public sector workers receive pay rewards more quickly.

The fuel duty freeze and 5p cut has been extended for another year. The state pension was increased by £470 a year. And a fair repayment rate has been introduced, reducing Universal Credit deductions – this means 1.2 million of the poorest households will benefit by an average of £420 a year.

What’s happening with taxes?

The headline announcement was an increase in employer national insurance contributions. Although some have criticized this decision, it represents an honest approach to funding our vital public services. Rather than hiding behind stealth taxes or making unfunded promises, the Chancellor has made the difficult but necessary choice to ask those with the broadest shoulders to contribute more.

The budget also closes tax loopholes linked to inheritance tax breaks and increases capital gains tax on the wealthy, while protecting workers from direct tax increases. It’s about creating a fairer tax system where everyone pays their fair share.

The Chancellor also announced that the freeze on increasing tax thresholds in line with inflation, introduced by the Conservatives, would end in 2028.

What about public services?

After 14 years of underinvestment, this budget finally provides the investment our public services desperately need. The £44 billion increase in daily spending represents the biggest increase in public services since 2000, with significant funding for the NHS, schools and local councils.

This means more resources to reduce NHS waiting lists, repair crumbling school buildings and ensure councils can deliver vital local services. The £1 billion expansion of the Household Support Fund will also help councils support vulnerable residents during the cost of living crisis.

The devolved governments will receive an extra £6.6 billion under the Barnett formula. This includes £3.4 billion for the Scottish Government, £1.7 billion for the Welsh Government and £1.5 billion for the Northern Ireland Executive.

Will this contribute to the growth of the economy?

Unlike previous governments’ failed experiments with unfunded tax cuts, this budget takes a grown-up approach to economic growth. By investing in our public services and infrastructure, it lays the foundation for sustainable growth.

The £100 billion increase in public investment over five years will help modernize our infrastructure and support the transition to clean energy. It is essential that this investment in our future is made responsibly, within the framework of the new budgetary rules. This means that alongside increased spending on everyday utilities, funds are available for new energy, rail and residential infrastructure.

The Chancellor said further announcements would be made over the coming weeks on additional measures that would help grow the economy. Later this month she will give a speech on how pension funds can be used to support further investment in the UK economy.

Is there anything to fear?

Although this budget represents real progress, there is still much to do. The government must go further in reforming the welfare system and ensure that public sector workers are properly rewarded for their vital work.

The expected slow growth in living standards, while an improvement on the previous government, also shows the scale of the economic challenges the Labor government has inherited.

However, this budget marks a clear break with the last 14 years of austerity and chaos. Instead of quick fixes and unfunded promises, it provides an honest assessment of what is needed to restore our public services and build a fairer economy.

By properly investing in public services, protecting the most vulnerable and asking those who have the most to contribute their fair share, this budget shows how different choices can lead to better outcomes for everyone. This is a grown-up approach that lays the foundation for a stronger, fairer country.

The message is clear: good public services require adequate funding, and this budget is finally starting to generate the necessary investments after years of decline. While there is still work to be done, this represents a welcome reset after 14 years of ineffective policies that have left our public services in tatters.