Rachel Reeves has pointed to the previous Tory governments and an “ill-conceived Brexit” as she refused to rule out tax rises at this month’s Budget.
The chancellor have in an unusual speech given ahead of the official Budget on 26 November, amid widespread speculation that Labour will break its manifesto commitments on tax rises.
In Reeves’ speech this morning, she said that she had to make “necessary choices” and that she has to “face the world as it is”.
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She said austerity policies under previous governments were a “hammer blow” to the UK’s economy and “gutted” the country’s public services.
“The years that followed were characterised by instability and indecision,” she continued, before hitting out at the “rushed and ill-conceived Brexit” delivered under the Tories. Reeves said this meant the UK was “underprepared” for the Covid pandemic, the BBC reports.
When asked about whether she will break Labour’s commitments to not increasing taxes on working people, Reeves refused to answer, saying today was about “setting the context” for the budget rather than individual policies.
“The easy thing to do would be to cut investment,” she told reporters. However, she believes those kind of choices “are the reason we have such low productivity today”.
Labour’s election manifesto read: “We will ensure taxes on working people are kept as low as possible. Labour will not increase taxes on working people, which is why we will not increase national insurance, the basic, higher, or additional rates of income tax, or VAT”.
The speculation on tax hikes come as the Office for Budget Responsibility (OBR) downgraded its productivity growth predictions for the UK, leaving Reeves with a hole of £20bn to fill.
Reeves also pointed out that the UK’s national debt stands at £2.6tn – or 94% of the national income.
Speaking to MPs on Monday evening, Prime Minister Keir Starmer warning MPs last night of the need for “tough but fair” decisions.
Starmer told Labour MPs that the budget “takes place against a difficult economic backdrop”.
He also cited Brexit and the Tories as contributing factors to the decision, saying: “It’s becoming clearer the long-term impact of Tory austerity, their botched Brexit deal and the pandemic on Britain’s productivity is worse than even we feared.”
“Faced with that, we will make the tough but fair decisions to renew our country and build it for the long term,” he added.