Rachel Reeves has laid the groundwork for major tax rises in her upcoming Budget. The Chancellor took the highly unusual step of making a speech three weeks before her statement on November 26 amid intense speculation over tax increases.
She declined to recommit to Labour’s manifesto commitment not to raise income tax, national insurance or VAT during her address from Downing Street. Ms Reeves, who insisted she would not come back for more after last year’s tax-hiking Budget, warned of “hard choices” and said “we will all have to contribute”.
Ms Reeves blamed global problems such as the tariff war triggered by US President Donald Trump and domestic issues including the budget watchdog’s expected downgrade of economic productivity.
Economists have estimated that the Chancellor will have to find billions to plug a black hole caused by U-turns on welfare spending cuts and increased debt interest costs.
She also wants to give herself a bigger buffer than the almost £10 billion she previously had against her rule of balancing day-to-day spending against tax receipts in 2029-30.
Ms Reeves repeatedly declined to confirm she will stick to Labour’s manifesto commitment, saying: “We’ve got to do the right things. The problem of the last 14 years is that political expediency always came above the national interest, and that is why we are in the mess that we are in today.”
She insisted she had been appointed Chancellor “not to always do what is popular, but to do what is right”. She added that would mean a focus on “cutting NHS waiting lists, cutting the national debt and cutting the cost of living“.
