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Chancellor Rachel Reeves said critics had presented ‘no real alternatives’ to her Budget plans for £40billion-a-year in tax rises to fund the NHS and cash-strapped public services
Defiant Rachel Reeves has told businesses she is “standing firm” on tax hikes but vowed people will feel better off under her plans.
The Chancellor said critics had presented “no real alternatives” to her Budget plans for £40billion-a-year in tax rises to fund the NHS and other cash-strapped public services.
Businesses are due to bear the brunt of the tax increases, with hikes to employer’s national insurance contributions from April. The move triggered a backlash, with some retailers and hospitality chiefs warning of job losses or even closures as they also grapple with increases to the minimum wage and business rates.
But Ms Reeves said she had to fix the mess left behind by the Tories and taking tough action now meant she won’t have to “come back for more”. Speaking to the Mirror on the way to a conference in Hull, the Chancellor said: “If you carry on sweeping things under the carpet or taking half measures, everyone knows you are going to need to come back for more.”
Ms Reeves said uncertainty was crippling for businesses – and while some are worried by increases to their tax bills, they aren’t going to face any more nasty surprises. “They can see we have taken the measures necessary to get a grip on the public finances, and as a result we are not going to need to come back and do a Budget like this again,” she said.
“This is a once-in-a-Parliament type of Budget to fix the mess that we inherited. Although I do understand businesses’ concerns, I think they also respect that I’m trying to deal with the mess rather than just let it drag on.”
The Chancellor said there had been “a lot of feedback but no real alternatives” to her Budget, adding: “Successful businesses need successful schools, a healthy economy needs a healthy NHS. We have got to be able to pay for these things.”
In a message to business leaders, she said: “We’re standing firm on this. We have to.” But she distanced herself from a recent commitment to business chiefs that there would be no more borrowing or more taxes.
“No Chancellor is going to be able to write five years worth of Budgets all at once, but that was a once in a Parliament type of Budget,” she said. “Public services are going to have to live within the envelope that we set out.
Mayors will be handed new powers to attract more investment to their regions under Labour’s plan to shift power out of Whitehall.
Chancellor Rachel Reeves unveiled plans to help regional leaders secure cash from private investors for innovative projects, which is currently concentrated in the South East.
Speaking in Hull, she said: “I can say that powers around attracting innovation and entrepreneurship, we are going to set up new strategic partnerships between mayors and Innovate UK and UKRI (UK Research and Innovation), who are responsible for the R&D and innovation budgets.
“I think that’s really exciting, because we’ve got fantastic universities, great entrepreneurs in our northern cities, and yet if you look at the money that comes from venture capital and private equity, it doesn’t flow enough to entrepreneurs outside of London and the South East.”
The powers will be set out in a white paper on devolution – expected before Christmas – which will spell out how power will be transferred out of Whitehall to regional leaders.
Ms Reeves said she had seen how “things have gone backwards” over the last 14 years in her Leeds Wesy and Pudsey constituency as local leaders scrap for tiny pots of cash.
She said she wanted to empower local mayors who know what’s best for their area.
“When we deliver the spending review, it will be based on the numbers in the Budget. We are not going to need to come back for more because we’ve done what was necessary.”
Asked if the promise was a mistake, she said: “We are definitely not going to need to do a Budget like that again, we’ve set the envelope for public spending so we don’t need to come back with more borrowing or more taxes. But no Chancellor can tie their hands for five years because you don’t know what economic shocks are going to come.”
Ms Reeves said driving up economic growth is Labour’s top priority so it can drive up living standards for ordinary people. She said: “You need economic growth to deliver improved living standards and you need economic growth to fund public services.
“We want to deliver for people. We want to make sure economic growth is felt in people’s pockets and that’s through improvements in their income. Obviously by the next election we want people to feel better off, to be better off, to feel it in their pockets.”
Ms Reeves said that was why she had avoided tax hikes on the payslips of working people, and maintained the freeze on fuel duty. But she added: “We have had to ask businesses and the wealthiest in society to pay more.
“But that’s a better choice than the choice the Conservatives made over the last few years which was to keep whacking up taxes on ordinary working people.”
In a blast at the opposition, Ms Reeves said the Tories “aren’t serious” as the party has already said it would reverse more than £7billion in tax rises since Kemi Badenoch became leader. “You can understand how we inherited a £22billion black hole in the first place,” she said.
“In my experience of 14 years (in opposition), if you make promises that in the end the electorate know don’t add up, you are not going to have a chance to get back in Government again. It took us a number of years to learn that lesson but under Keir Starmer, we changed the Labour Party so we have a chance of changing the country for the better – but they don’t seem to be learning any of those lessons.”
