Reeves prepares ground for tax rises in Budget with call for ‘all’ to contribute
Chancellor Rachel Reeves on Tuesday prepared the public for further tax rises in this month’s Budget as she repeatedly refused to recommit to Labour’s manifesto pledges.
“If we are to build the future of Britain together, we will all have to contribute to that effort,” Reeves said in a speech from Downing Street. “Each of us must do our bit.”
The chancellor refused when asked to repeat her manifesto pledge not to raise the rates of income tax, national insurance or value added tax.
But she pointed to a looming downgrade in productivity forecasts by the government’s fiscal watchdog, the Office for Budget Responsibility. The downgrade will blow a hole in her spending plans.
“My focus will be on getting NHS waiting lists down, getting the cost of living down, and also getting the national debt down,” she added.
The chancellor also signalled that she intended to build a bigger fiscal buffer than she has had to date, holding out the prospect of “more resilient public finances with the headroom to withstand global turbulence”.
The pound fell to its lowest level against the dollar since April on Tuesday, as markets digested the possible hit to economic growth from tax rises.
Opposition politicians attacked Reeves. Conservative leader Kemi Badenoch criticised the prospect of higher taxes and reiterated the Conservatives pledge to cut the welfare bill.
Nigel Farage, leader of Reform UK, said the speech showed “you can’t trust a word Rachel Reeves says”.
The Budget is shaping up to be a potentially defining moment for Sir Keir Starmer’s government, as it contends with a fiscal hole economists estimate at about ￡30bn, sluggish economic growth and a plunge in the opinion polls.
Greens call on Reeves to tax ‘extreme wealth’
The Green party has called on Rachel Reeves to increase taxes on wealthy people to “tackle the cost of living crisis”.
Adrian Ramsay, Green party MP, said the chancellor had spoken of “difficult decisions for everyone but the ultra-rich”.
“It’s time to tackle the cost of living crisis, end child poverty and invest in our vital public services by taxing extreme wealth fairly,” he said in a social media post.
The Greens, led by Zack Polanski, has risen steadily in the polls this year, and was level with the Conservatives on 16 per cent in a YouGov poll released on Tuesday.
Chancellor’s ‘bold’ words provide balm for gilt market, analyst says
Rachel Reeves “provided the gilt market with all the right comforting words as we head towards the autumn Budget”, according to Matthew Amis, investment director for rates management at Aberdeen Investments.
Amis pointed to Reeves’ reassurance over her fiscal rules and the chancellor’s references to lowering inflation.
“If chancellor Reeves is as bold as she was this morning at the autumn Budget, then we believe gilt yields can continue to fall into year-end,” Amis said.