Tax rises look even more likely after Rachel Reeves refuses to rule them out
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Rachel Reeves refused to rule out tax increases during an unexpected pre-Autumn Budget address inside Downing Street.
The chancellor clung to her job last week after being cleared over her ‘inadvertent’ failure to obtain a rental licence for her south London home.
Labour ruled out any increase to VAT, National Insurance and income tax in the party’s manifesto, something Reeves echoed at last year’s budget.
Asked after her speech today by SkyNews if this will happen, Reeves did not say the government ‘stands’ by this pledge as she once said.
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Reeves said: ‘I will set out individual policies in the budget on November 26, that’s not what today is.
‘Today is about setting the context for that budget.’
She added: ‘Your viewers can see the challenges that we face, the challenges that are of a global nature. And they can also see the challenges in the long-term performance of our economy.
‘As chancellor, I have to face the world as it is, not the world as I want it to be. And when challenges come our way, the only question is how to respond to them, not whether to respond or not.
The interesting thing was not what Reeves said – but why, writes Craig Munro
Metro‘s Senior Political Reporter Craig Munro was in the room for the Chancellor’s speech.
Rachel Reeves devoted much of her speech this morning to setting out the economic context for the Budget she will deliver in just over three weeks.
But the really eye-catching part was the context around the speech itself.
Chancellors do not normally do this sort of thing less than a month before the Budget.
Usually, they spend this period beavering away on what will be announced and how to sell it to the public – as well as constantly refusing to give reporters any details ahead of time.
The content of the speech may not have been remarkable, but the fact that she was delivering it was.
So we can maybe surmise that whatever is coming on November 26, the Treasury anticipates it’s going to need a really hard sell. And yes, that means tax rises are likely.
At political events like these, the Q&A session afterwards is often more illuminating than the speech itself, and that was certainly the case here.
Again and again, journalists gave her the opportunity to say she was sticking with the Labour manifesto’s commitments on tax, and she repeatedly failed to do so.
Is it genuinely her plan to do so? Or is she just setting low expectations so whatever is announced won’t seem so bad? We won’t know for sure until the end of this month.
Reeves swatted away speculations that taxes will rise for millions of people when asked by ITV and the BBC.
Another reporter asked Reeves whether she would prefer to hike taxes up or be ‘popular’, she replied: ‘I’d like to do both, but I’d like to do what’s right.
The chancellor is disliked by six in 10 people in the UK, liked by just 15%, according to YouGov.
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Reeves instead insisted that the country faces ‘big challenges’ which she will not ‘sweep these under the carpet’ like previous governments.
Labour 2024 manifesto said: ‘Labour will not increase taxes on working people, which is why we will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT.’
In Reeves’ speech, which was announced only last night, she said she will make ‘the choices necessary to deliver strong foundations for the economy’.
Much of Reeves’ address repeatedly focused on the ‘hammer blows’ dealt by the previous Conservative government, including austerity and Brexit,
‘All this meant that when the pandemic arrived, the country was unprepared,’ she said.
The UK remains a nation of delayed trains and potholes, Reeves said, but this is because Tory governments prioritised ‘political convenience’.
Fragile supply chains, stubborn inflation, a large national debt and global uncertainty remain major concerns for the government’s spending, however.
Inflation, which means a pound coin today doesn’t go as far as it did yesterday, is at 3.8%.
While from the year up to July, the debt swelled from £2.53trillion to £2.71trillion.
Reeves added, ‘but I know that progress takes time,’ stressing that her budget will focus on easing the cost-of-living crisis and slashing debt.
‘Those that continue to push for easy answers are irresponsible now,’ she added.
The Autumn Budget will set out the government’s plans for tax rises and spending cuts.
Analysts widely expect Reeves will hike taxes to avoid massive spending cuts.
Josh Wheeler, founder of the London PR firm Be Broadcast, told Metro that Reeves’ unexpected speech amounted to a ‘Notes App apology’.
‘Instead of clarity, there was caution. Instead of leadership, justification,’ Wheeler said.
‘The core line – “it’s the last government’s fault” – might work internally, but to the public it sounds tired. It signals deflection, not direction.’
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