Pull the other one, Chancellor! Reeves insists £30bn Budget tax hike was the ‘absolute minimum’… despite OBR watchdog downgrade being just £6bn and huge sums going on benefits
Rachel Reeves insisted the massive £30bn tax increase in the budget was the ‘absolute minimum’, despite committing huge sums to benefits.
The Chancellor said he “had to” inflict more pain on the country despite the Treasury’s own watchdog saying there was only a £6bn gap in the public finances.
He also agonized over whether the package ran counter to Labour’s manifesto, claiming the document only promised not to change tax ‘rates’.
The massive raid announced yesterday also includes an eye-watering £12.7bn from extending the freeze on the hated tax threshold for another three years.
By then, about a quarter of the working population will pay a higher or top rate tax than when it is implemented in 2021, which is just 15 percent.
If it had risen in line with inflation, the higher rate threshold would have been £70,370 instead of £50,270 by 2030.
Chancellor Rachel Reeves said she “had to” inflict more pain on the country, despite the Treasury’s own watchdog saying there was only a £6bn gap in the public finances.
The tax burden is expected to reach a new peak as a percentage of GDP in records dating back more than 300 years.
The Office for Budget Responsibility said economic growth under Labor would be even lower than forecast last year and warned that none of the 88 measures announced by Ms Reeves would have a ‘material impact’ on boosting GDP.
The decision to spend £3 billion a year to lift the two-child limit has been wildly applauded by Labor MPs.
But it will also involve distributing taxpayer grants worth thousands of pounds a year each to Britain’s largest unemployed families.
The OBR warned on Wednesday night that the grant would result in a further 25,000 large families claiming help at an estimated cost of £300 million.
General welfare spending is forecast to be £16 billion higher by 2030-31 than the watchdog thought as recently as March.
Worryingly, annual welfare spending is forecast to rise from £333bn in 2025-26 to £389.4bn in 2029-30.
While the Conservatives condemned this as a ‘budget avenue for social benefits’, Nigel Farage harshly attacked it as an ‘attack on aspirations’.
But the measures were welcomed by Labor MPs, with ministers claiming Ms Reeves had ‘saved herself’.
In an interview this morning, the Chancellor told GB News: ‘I had to raise taxes yesterday, but I kept them to the absolute minimum for ordinary working people and frozen those thresholds for another three years from 2028.’
Ms Reeves added: ‘This Government supports that request.’
The Chancellor told Sky News that Labor ‘made it very clear in the manifesto that we will not be increasing income tax, national insurance or VAT rates’.
He added: ‘But yesterday I realized that by freezing these thresholds from 2028 I’m asking working people to contribute a bit more.
‘I know this will mean working people will pay slightly more, but as the IFS and Resolution Foundation have said, I have kept this contribution to an absolute minimum by closing a number of tax loopholes and also reducing government spending, waste and inefficiency.
‘And as a result I’ve managed to keep this to a minimum, but people are aware that the public finances are under a lot of pressure.’
Ms Reeves said she ‘does not deny that this has an impact on working people’.
‘But what we’re doing is taking £150 off people’s energy bills next year, that’s significant. “This is the biggest challenge for people and retirees across the country,” he added.
