Rachel Reeves admitted tough ‘choices’ are coming in the Budget today amid mounting alarm at the threat of tax hikes.
The Chancellor insisted she was going to keep taxes ‘as low as possible’ as Brits brace for more pain in her fiscal package on November 26.
In her address at the Labour conference, she warned that the situation is becoming more challenging due to ‘global headwinds’. She stated, ‘I will make my choices at that Budget. These will be choices that propel this country forward… I will not jeopardize the trust placed in us by the British public’.
Ms. Reeves subtly criticized Andy Burnham’s idea of confronting bond markets, implying that increasing debt is not ‘progressive’.
And she said the ‘single greatest threat’ to the UK was Nigel Farage and Reform. ‘They are not on the side of working people,’ she added.
At one point the speech was interrupted by shouts from the audience about ‘genocide’ and the ‘mass starvation of Palestinians’.
But after saying she understood concerns, Ms Reeves shot back that Labour was a ‘party in government not a party in protest’.
During her speech, she emphasized her ‘patriotism’, asserting her support for the UK steel industry. She also criticized Thatcherism, stating it neglected disadvantaged children and expressed her vision of a nation built on ‘contribution’.
Rachel Reeves used her address to talk up her ‘patriotism’, saying she was standing behind the UK steel industry
The Chancellor was interrupted by shouts from the audience in Liverpool about ‘genocide’ and the ‘mass starvation of Palestinians’
The Labour manifesto promised no rises to income tax, NICs or VAT
There has been rising speculation that Ms. Reeves might have to amend Labour’s election manifesto, which promised to avoid raising income tax, employee national insurance, or VAT.
Earlier, Ms. Reeves mentioned she had made a ‘solemn promise’ to stabilize the nation’s finances, avoiding direct answers about her strategy to address a projected £30 billion shortfall in the government’s budget.
While speaking at the Labour conference in Liverpool before her main speech, Ms. Reeves repeatedly affirmed that she ‘stands by those commitments’ without offering specific assurances during her media tour.
Some believe the government could expand VAT to areas such as taxi fares, rather than increasing the main rate.
‘There are global headwinds at the moment, we can see that the world has changed hugely since the last election,’ she told Sky News.
‘But those manifesto commitments we made in the manifesto 15 months ago, those manifesto commitments stand.’
Pressed on whether a VAT rise would count as a tax rise on working people, Ms Reeves said: ‘That (VAT) was part of our manifesto pledges. Because if we are talking about living standards the prices in the shops are obviously crucial to people’s living standards.’
The Chancellor insisted she had not yet received forecasts from the Treasury’s OBR watchdog.
Asked if taxes would have to bear the burden of filling any black hole in the finances, Ms Reeves said she would bring forward ‘a combination of changes, if needed, to tax and spending’.
Labour has already been accused of breaking its manifesto once by increasing national insurance for employers – although ministers argue they only said they would protect workers.
The extra costs for businesses have been blamed for slowing down the economy and staff recruitment.
Keir Starmer sparked concern about VAT yesterday after seeming to choose his words carefully during a BBC interview.
He insisted the manifesto ‘stands’ rather than giving any specific assurances.
Ms Reeves also signalled she wants the OBR to do one set of forecasts a year instead of two – something the watchdog has suggested it will resist.
She told Times Radio: ‘The International Monetary Fund (IMF) have said that we should move to just one major fiscal event a year, and I agree with their recommendations, and to be able to do that, we do need to change the way that the OBR do their forecasting.
‘Two full forecasts a year make it harder to have that one fiscal event. There are different ways you could do it, you could do a shorter term forecast, you could do a forecast that just looks at the changes in the economy over that period of time.’
She added: ‘We’ve already moved to having just one budget a year, but we’re trying through these changes to facilitate that.’
Keir Starmer (pictured on a visit with Ms Reeves in Liverpool) sparked concern about VAT yesterday after seeming to choose his words carefully during a BBC interview
The stalling economy, productivity downgrades and rising interest rates have left the Chancellor with a black hole estimated at £30billion to fill.
But businesses have been voicing alarm at the prospect of more eye-watering tax hikes, with warnings they could plunge the country into a ‘doom loop’.
Unite is expected to try to force a vote on a ‘wealth tax’ at the conference – threatening to cut ties with the party unless the Budget shows a ‘direction change’.
