Reeves defends ‘fair and necessary’ £26bn tax raid after Budget backlash
Rachel Reeves has defended the £26bn budget tax raid as “fair and necessary” and insisted the rich should share more of the economic “burden”.
Ms Reeves was accused of misleading the public about the country’s finances to justify tax increases after she insisted she had to make “difficult choices” despite knowing the budget deficit had disappeared and she instead had a surplus of £4.2bn.
But in an interview GuardMs Reeves backed her move to introduce 43 separate taxes and freeze income tax thresholds, saying she did not want to make cuts, driving millions into paying higher taxes.
“I wasn’t willing to cut public services because people voted for change in the election,” he said.
He insisted that the burden of rebuilding the country’s “creaking” public services should be the responsibility of Britain’s wealthy and denied that working-age people were being asked to carry a greater burden than pensioners.
“It’s pretty clear that the economic burden on the budget is not about age, it’s about wealth,” he said. “Those who bear the greatest burden are those with large incomes and assets… so I don’t accept that.
“We will never get out of this problem of weak growth unless we invest in the economy and invest in things that will increase our productivity.”
The chancellor also addressed leadership speculation after a difficult few weeks for the prime minister but insisted the party was behind Sir Keir Starmer.
“We all know what happened in the last government through leaders and chancellors,” he said. “It was bad for the country”
Ahead of the budget, warnings were that Rachel Reeves could face a financial gap of up to £20bn in meeting her self-imposed rule of not borrowing for day-to-day expenses. And on November 4, he signaled that higher taxes were likely due to Donald Trump’s tariff war and the Budget watchdog’s expected decline in economic productivity.
But on Friday the Office for Budget Responsibility (OBR) revealed that it had notified the chancellor as early as September 17 that the gap was smaller than initially expected, only to later say the deficit had disappeared and there was a surplus instead.
Mrs. Reeves told Guard: “People often talk about what rectors do with their budgets, but sometimes it’s the things you don’t do that are more important. One of the things I didn’t do was cut investment in capital spending, new schools and hospitals, new energy infrastructure, rail infrastructure.
“The easiest thing to do would be to say the OBR has made this downgrade and you need to cut our fabric accordingly.”
Conservative leader Kemi Badenoch said the statement from the OBR showed Ms Reeves was “lying to the public” and called for her to be sacked.
But Downing Street denied Ms Reeves had misled the public and markets in the run-up to the Budget.
“I do not accept this,” the prime minister’s official spokesman said. “He talked about the challenges facing the country in his speech here (Downing Street) and made his decisions incredibly clear in the budget.”
But Paul Johnson, former chairman of the Institute for Fiscal Studies (IFS), said: “I think so [her November 4 press conference] “It was probably misleading.”
He said his remarks were “clearly intended” to confirm what independent forecasters such as the National Institute for Economic and Social Research (NIESR) had said after predicting that Ms Reeves would have to fill a multibillion-pound black hole in the country’s finances.
Mr Johnson said the speech was designed to “confirm the narrative that there was a fiscal black hole that needed to be filled with significant tax increases. In fact there was no such hole as he knew at the time”.
