Rachel Reeves Paves The Way For Budget Tax Rises As Labour's Economic Woes Continue

Rachel Reeves is set to pave the way for tax rises in the Budget later this month – amid mounting speculation she will break Labour’s biggest election promise.

The chancellor will level with voters about “the circumstances we are facing” in a major speech on Tuesday morning.

She will pledge to “protect our NHS”, cut the national debt and tackle the cost of living when she delivers the Budget on November 26.

Reeves will also have to find the money to fill a black hole of at least £30 billion in the government’s finances. 

She is understood to be considering hiking income tax by 2p in the pound to raise around £6 billion.

That is despite Labour’s election manifesto pledge not to put up income tax, VAT or National Insurance.

Speaking in Downing Street, the chancellor will say: “I will make the choices necessary to deliver strong foundations for our economy – for this year and years to come.

“It will be a Budget led by this government’s values of fairness and opportunity and focused squarely on the priorities of the British people: protecting our NHS, reducing our national debt and improving the cost of living.

“You will all have heard a lot of speculation about the choices I will make. I understand that – these are important choices that will shape our economy for years to come.

“But it is important that people understand the circumstances we are facing, the principles guiding my choices – and why I believe they will be the right choices for the country.”

Her comments are the clearest indication yet that major tax rises are coming as she struggles to balance the nation’s books.

Speaking to HuffPost UK in April, Reeves insisted she would not break Labour’s election pledge on tax.

She said: “We will stick to those commitments, they were in our manifesto.

“We recognise that the cost of living crisis hit working people hard in the last parliament – they saw their taxes go up, they saw their mortgage payments and rent go up, their bills go up, and we’re not going to go back to those days.

“Even when I had to put up taxes in the last Budget to deal with the black hole in the public finances that the Conservatives bequeathed to the government in which I serve, we didn’t increase taxes on working people.”

Reeves added: “I can’t write the next four years’ worth of Budgets, but we made those manifesto commitments for a reason and we will stick with those manifesto commitments, and those are not to raise the income tax, National Insurance and VAT that working people pay.”