Rachel Reeves has repeatedly declined to guarantee that there will be no more borrowing or tax rises following her first Budget, despite being pressed by MPs on her previous pledge.
Speaking at the Confederation of British Industry (CBI) conference in November, the Chancellor sought to reassure business leaders that there would be no repeat of the £40bn of tax hikes announced in her first Budget at the end of October.
“I’m really clear, I’m not coming back with more borrowing or more taxes,” she said, just a few weeks ago.
Several Tory MPs asked the Chancellor to reiterate her promise made to the CBI conference, but she declined to do so in explicit terms.
Shadow Chancellor Mel Stride said: “When she recently pledged to the CBI that she would not be raising taxes again, did she mean it?”
Budget repeat?
And Reeves replied: “At the Budget in October, which [he] knows, we had to fix a £22bn black hole in the public finances.
“And of course some of that black hole comes from the fact that we are the only G7 economy where employment is lower than it was before the pandemic, when he was presiding as work and pensions secretary in the previous government.”
Stride also asked whether Downing Street had “changed its mind”, or if she “spoke without thinking” when she told business chiefs she would not repeat her Budget hikes.
Reeves insisted: “No Chancellor is going to write five years worth of Budget in their first five months as Chancellor of the Exchequer, but what I can say is that we will never have to deliver a Budget like that again.”
She was also pressed by Conservative MP Nick Timothy, who also asked her to repeat her own words, saying: “Last week the Chancellor told the CBI she wouldn’t ‘come back with more borrowing or taxes’… so will she repeat them today… yes or no?”
The Chancellor replied: “At the Budget in October we had to fill the £22bn black hole left by the previous government. We will never have to repeat a Budget like that because we won’t ever have to clear up the mess of the previous government ever again.”
It came after Sir Keir Starmer appeared to row back from Reeves’s pledge when questioned by Tory leader Kemi Badenoch at last week’s Prime Minister’s Questions (PMQs), saying he was “not going to write the next five years of Budgets here at this despatch box”.
Reeves’ on public finances
While speaking at the Yorkshire Post’s great northern conference in Hull, Reeves once again declined to repeat her promise not to raise taxes further after this year’s Budget, but said again that public services would have to “live within their means”.
She argued she had “done what it takes to get a grip of those public finances so that I won’t have to come back in the spring or next autumn… you can have confidence I have done that.”
Reeves added: “That’s going to mean difficult decisions come the spring on public spending, but public services do now need to live within their means, because I’m not going to be coming back with another load of tax rises or indeed higher borrowing to fund this.”
John O’Connell, chief executive of the TaxPayers’ Alliance commented: “Taxpayers will be genuinely fearing a spring tax raid in the new year given the comments by the chancellor.
“Reeves should deliver on the promise she made just weeks ago to not impose any more punishing tax hikes on businesses and households.”