Chancellor Rachel Reeves faces a battle to fill the black hole in her spending plans after U-turns on winter fuel and disability benefit cuts wiped out most of her headroom
Rachel Reeves has insisted ordinary workers won’t be clobbered by higher taxes – and she has no plans for another mega tax-raising Budget.
The Chancellor faces a battle to fill the black hole in her spending plans after U-turns on winter fuel and disability benefit cuts wiped out most of her £10billion headroom. And speculation is mounting that she will be forced to put up taxes to balance the books.
Senior Labour figures including ex-leader Neil Kinnock have floated the idea of a wealth tax on the mega-rich. Ms Reeves has refused to rule out the idea, saying she would not be drawn into speculation months ahead of the next Budget.
But speaking to the Mirror today that she would keep her manifesto pledge to protect the payslips of working people. Asked who was covered by the definition of ‘working people’, the Chancellor said: “You can see what we mean by the manifesto commitments we made, and we said, no increases in income tax, national insurance or VAT on working people, and we stuck to that in the Budget last year.
READ MORE: First-time buyers
“It was a tough budget last year, we raised £40billion worth of tax, but we did that by asking the wealthiest and businesses to pay more to sort out the problems with our public finances that we inherited from the Tories, but also to put £29billion extra a year into the National Health Service. We did that without increasing any of those taxes, those key taxes that working people pay.”
She added: “I don’t think we need to define more than that, really. We made a commitment in our manifesto to not increase those taxes. We didn’t last year. It remains our commitment for this Parliament.”
Ms Reeves said previously she had no intention of doing another Budget on that scale again. Asked if the commitment remains, she said: “Yes. Last year, I had to deal with the inheritance that I faced, which included a £22billion black hole in the public finances.”
She said the cash from the Budget was vital to put public services on a firmer footing after years of Tory neglect, including work to begin driving down NHS waiting lists.
She said: “Everyone can see that in the last year, the world has changed, conflicts in the Middle East, worries about security in Europe, disruptions to trade.” But she added: “We’re a strong economy. We can weather those storms.”
Ms Reeves visited Westleigh Methodist Primary School, in Leigh, on Monday, as she unveiled a £500million Better Futures Fund to help get cash to schemes for at-risk children. It comes as the Government faces pressure from its own backbenchers to do more to tackle child poverty.
The Tory two child benefit limit is shaping up to be another flashpoint between MPs and the Government, which would cost around £3.5billion a year to scrap. Asked if axing it was still on the table after the disability cuts U-turn, she said: “I’m not wedded to any particular policy. I absolutely share the desire to lift kids out of poverty and you can see in the budget and the spending review that we’ve already done, my commitment to that.”
Ms Reeves said driving down poverty was personal to many members of Keir Starmer’s Cabinet, as a number of top ministers grew up in difficult circumstances. Pointing to the Better Futures Fund, she said she saw this as part of a “down payment” made to help struggling kids, including the recent expansion of free school meals provision.
She said: “[Reducing] child poverty is about putting more money in the pockets of families. This is about expanding the opportunities, the horizons, the ambitions of young people. It’s about improving school attendance and school attainment.
“It’s about putting kids in touch with different opportunities in the local community… to give children opportunities to do things that they might not otherwise get the chance to do.
“Today, I was in a learning through play session with children, and some of these kids have not got toys at home. Certainly, they don’t have the opportunities that my children or that any of us would want our children to have.”
She added: “We know there’s loads of children who turn up at school when they’re four or five for reception and they’re not ready for school, not potty trained, can’t sit in a chair, can’t eat with a knife and fork, don’t recognize letters, don’t recognize numbers.
“All of this is about not just ensuring that parents have more money in their pockets, but that is really important to me… it’s also about expanding the opportunities, and that means working individually with children and families to extend and expand their opportunities and life chances.”
She added: “I got involved in politics in the first place because I wanted more children from ordinary backgrounds and from some of the poorer backgrounds as well, to get a good start in life. Where you start shouldn’t be your destiny.”
READ MORE: Join our Mirror politics WhatsApp group to get the latest updates from Westminster