Claims Reeves’s post-Budget U-turns cost her £3bn of £22bn headroom in just six weeks
Fears have grown that Rachel Reeves may have spent £3bn of the £22bn gap she has allocated in the Budget in just six weeks.
Conservative shadow chancellor Sir Mel Stride is pressing the chancellor to “clarify” whether his spring statement in March will turn into a mini-Budget following a flurry of U-turns and concessions since he announced his Budget on November 26.
The statement comes amid conflicting claims about how much a U-turn on canceling the Covid-19 business rates cut would cost the Exchequer.
Treasury sources have suggested this could be £300 million, with aid focused on pubs, while other sources have suggested the bill could be as much as £2.4 billion.
The difference stems from confusion over whether the U-turn will only cover pubs or other parts of the high street.
On Sunday, Labor rebel Rachael Maskell added her voice to those calling for high street shops and cafes to also be closed.
He told Times Radio: “I think the reason we hear so much about pubs is because pubs have such a strong lobby and they can get that message to the government.
“But it affects other parts of the industry too, the hotel part of the industry, leisure and tourism, as well as the retail sector that I just mentioned. And maybe the smaller independent shops don’t have a route to Westminster.”
Hinting that a fight was looming between Ms Reeves and Labor supporters, he added: “The campaign is not stopping because the reality is we are going to fight for these jobs. We are going to fight for people to keep their jobs. And ultimately that will mean closures and increased unemployment.”
“I don’t think any of us want to see business owners working so hard on the real challenges they’re having with Covid and, of course, the cost of living.”
Meanwhile, the cost of rejoining the EU’s Erasmus program is estimated to cost more than £500 million, while changes to inheritance tax to exempt more family farms are expected to cost £200 million.
The Chancellor allocated himself £22bn of extra headroom in the last budget, but when all these calculations are taken into account figures suggest he could spend up to £3bn of this in just six weeks.
Moreover, Ms. Reeves’s decision to exempt retirees from freezing income tax thresholds still comes at no cost.
Sir Mel has written to Ms Reeves demanding her commitment to make an oral statement to the House of Commons with the Office for Budget Responsibility’s (OBR) forecasts and spring statement intended to be an update on a “non-fiscal event”.
Ms Reeves, whose future as chancellor is under scrutiny, said she would give an oral statement to allow MPs to question her about the details.
Sir Mel said: “We have already had U-turns and other major spending since the budget, including: a partial U-turn on family farm tax and family business tax; a U-turn on business rates about to be announced; exempting some pensioners from the freeze on tax thresholds; and over half a billion pounds being transferred to the EU to rejoin the Erasmus scheme.”
“None of this was costed in the Budget 6 weeks ago. We don’t have an answer yet on how any of this will be paid for.”
“The non-financial event of March looks set to become a financial event anyway. Rachel Reeves has completely lost control of the country’s finances.”
However, the figures are disputed by the Treasury.
A Treasury spokesman said: “We do not recognize these figures. We are supporting hospitality businesses with a £4.3bn support package to limit bill increases, as well as capping corporation tax at 25 per cent, cutting red tape and taking action on cost of living to revitalize high streets.
“The budget doubles down on the fiscal gap, while confirming that we will cut unnecessary red tape for pensioners whose sole income is a state pension and end small tax bills through simple assessment from 2027-28.
“We have also listened to farmers by increasing the benefit threshold to £2.5 million, ensuring the largest estates pay their fair share while protecting small family farms and businesses.”
