Future tax rises won’t be needed, insists Rachel Reeves

The chancellor has said she will not need to raise taxes to “top up” public spending, after facing pressure to spell out her future tax plans.

Rachel Reeves made headlines last week by telling a business conference she would not be “coming back” with tax hikes in the coming years.

She declined to repeat the promise earlier when challenged to do so by MPs, but has now told reporters “another load of tax rises” will not happen.

The Conservatives have accused her of “undermining business confidence” and lacking a stable message for firms.

It comes after she announced a rise in employers’ National Insurance (NI) at October’s Budget.

From next April, employers will have to pay NI at 15% on salaries above £5,000, instead of 13.8% on salaries above £9,100 currently.

Ministers have argued the hike is a tough but necessary decision required to fund public services and fix a “hole” in public spending plans they inherited from the Conservatives.

But it has led to a political row, with opposition parties arguing it will dent future economic growth and make companies less likely to hire workers.

Speaking at a Confederation of British Industry (CBI) conference last week, the chancellor suggested further rises would not be required because Labour’s Budget would “put our public finances back on a firm footing”.

She added: “Public services now need to live within their means because I’m really clear, I’m not coming back with more borrowing or more taxes”.

She told business leaders she wanted to raise extra revenue “all at once” to give firms confidence she would not have to “come back for more” in future years.

But Business Secretary Jonthan Reynolds gave a less specific commitment that only “comparable” business tax rises would not be repeated, when asked by MPs.

Sir Keir Starmer then declined to repeat the pledge during Prime Minister’s Questions last week.

At a regular scrutiny session in the Commons on Tuesday, her first appearance in Parliament since her CBI comments, Conservative MPs pushed her to repeat her pledge not to raise taxes.

After the chancellor also declined to repeat the specific pledge not to raise business taxes, the Conservatives accused her of being unable to “repeat her own words” and “undermining business confidence”.

“How can businesses be expected to create jobs, growth and wealth in the economy when the government offers neither stability or credibility?” added shadow Treasury minister Richard Fuller.

But at a conference in Hull for northern business leaders, politicians and media a few hours later on Tuesday, she said she was “not going to coming back with another load of tax rises or indeed higher borrowing” to fund public services.

“I have now set the envelope for government spending for the next few years, so I’m not going to need to come back and top that up, either with more borrowing or more taxes,” she added.

But she suggested potential future economic shocks meant she could not “write five years’ worth of budgets in just five months”.

“We don’t know what might happen in the future in terms of shocks to the economy,” she added.