The Chancellor has given her strongest hint yet that Labour’s pledge not to raise taxes on working people will be broken in the budget later this month
In a speech from No 9 Downing Street today, Rachel Reeves declared that all would have to “contribute” to the task of protecting public services and the economy and that “each must do our bit”.
“But it is important that people understand the circumstances we are facing, the principles guiding my choices – and why I believe they will be the right choices for the country.”
She warned that a “rushed and ill-conceived” Brexit, austerity (“a hammer blow to our economy”) and Covid-19 had damaged the UK’s growth potential.
She suggested that she is ready to break manifesto pledges with tax rises, saying she has to face the world as it is rather than as she wants it to be
She says she will put the national interest before ‘political expediency’
‘If we are to build the future of Britain together, we will all have to contribute to that effort. Each of us must do our bit for the security of our country and the brightness of its future.
‘There is a reward for getting these decisions right, to build more resilient public finances with the headroom to withstand global turbulence, giving business the confidence to invest and leaving government freer to act when the situation calls for it, to continue to invest in our infrastructure and our industry, to build a stronger economy and to get the cost of borrowing down’
Chris Fletcher, Policy Director at Greater Manchester Chamber of Commerce said:
“With growing anxiety surrounding the upcoming Budget announcement on 26th November, the Chancellor sought this morning to set the tone and provide early insight into what might unfold later this month.
“It is quite clear though that the Chancellor’s options are very limited and it almost seems inevitable that there will have to be some rise in taxation. The Chancellor set out one of her favoured tactics of listing the issues that the government is having to deal with, some, such as the impact on trade of US tariffs are recent others less so but what was clear is that the economy is in a much more fraught state than 12 months ago.
“Whilst the focus is increasingly on tax increases, it’s important to recall that employers have already absorbed a substantial tax burden through the Employer NICs hike announced last year and enacted in April. The ongoing impact of this decision is significant and is one of the main barriers to growth that is hitting the UK economy at present. Our latest Quarterly Economic Survey reveals a sharp decline in business confidence, with mounting concern over the impact of further taxation on business.
“Everyone wants a stable, growth-oriented economy where businesses can invest and hire with confidence. Yet, following the Chancellor’s remarks this morning, the only certainty seems to be heightened expectations of further tax rises – without any clarity on their nature or scope.”
Keir Starmer told Labour MPs in a private meeting last night that the Budget would feature ‘tough but fair decisions’, and that the economic backdrop is ‘worse than even we feared’.
However reports in the I this morning also suggest that Abolishing the two-child benefit cap in its entirety is still “on the table” for the Budget
The paper says that Chancellor is considering a range of options – including partial measures such as reduced payments for third and subsequent children – but a “full-fat” policy of completely scrapping the cap has not been ruled out.
