Labour government would aim to cut taxes, Rachel Reeves says, after Conservatives slash National Insurance
6 March 2024, 20:11 | Updated: 6 March 2024, 21:03
A Labour government would aim to cut taxes and let "working people keep more of their own money," Rachel Reeves has told LBC.
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Speaking after the Budget announcement on Wednesday, which saw her Conservative counterpart Jeremy Hunt cut National Insurance, the Shadow Chancellor said Labour has "no intention of making working people pay more in tax".
Ms Reeves told LBC's Iain Dale that there were a few "targeted" areas in which taxes would increase: private equity bosses’ bonuses, energy company profits and private schools being made to pay VAT and business rates.
But "we don’t have any tax increases beyond those," she said during the phone-in.
"We think that with the tax burden at a 70-year high, we would like taxes on working people to be lower, and we have no intention of making working people pay more in tax".
Shadow Chancellor: An incoming Labour government would want to 'cut taxes'
She insisted that while she wanted "working people to keep more of their own money," she wouldn't make any unfunded commitments to tax cuts.
A general election is very likely to take place this year - perhaps as soon as May - with Labour firm favourites to win. That means Ms Reeves is likely to be the Chancellor within a few months.
Pressed for more details on how a future Labour government might cut taxes, she said that "fiscal drag is a big problem".
Ms Reeves said: "There are going to be millions more people paying tax by the end of the forecast period than there were previously, because as inflation and incomes grow, but the tax threshold doesn’t increase, more people are dragged into paying tax even though they’re really no better off because prices have just increased. I think that is a problem."
She added: "My ambition is to grow the economy, that’s the number one mission of an incoming Labour government.
"And if we grow the economy in the way that I expect to then we will have money to be able to reduce the burden of tax on working people, and… have the money for some of that crucial public spending that is needed."
Mr Hunt earlier announced a series of fiscal measures that would be rolled out over the next few years, including modest cuts to National Insurance tax and frozen fuel and alcohol duty.
Labour leader Sir Keir Starmer said in response that "Britain deserves better" and his party is "ready" to govern.
Speaking following the vote on the Budget, the Labour leader called for the government to "break a habit of 14 years" and to "confirm May 2 as the date of the next general election".
Continuing his rebuttal, Sir Keir said: "There we have it, the last desperate act of a party that has failed. Britain in recession, the national credit card maxed out, and despite the measures today, the highest tax burden for 70 years."
"That is their record, it is still their record, give with one hand and take even more with the other, and nothing they do between now and the election will change that."
Sir Keir then referred to the prime minister and the chancellor as the "chuckle brothers of decline".
He told the Commons: "The Chancellor, who breezes into this chamber in a recession and tells the working people of this country that everything's on track. Crisis? What crisis? Or as the captain of the Titanic and the former Prime Minister herself might have said, iceberg? What iceberg?
"Smiling as the ship goes down, the chuckle brothers of decline, dreaming of Santa Monica or maybe just a quiet life in Surrey not having to self-fund his election."
Turning to some of the policies announced, Sir Keir said the Conservatives were trying to save their own skin by assuming Labour's policy of abolishing non-domicile status for wealthy foreign nationals.
He said copying the Labour policy was "a desperate move" before asks why they did not do it earlier.
Labour's Shadow Health Secretary Wes Streeting yesterday told LBC's Andrew Marr that he expected the Conservative government to 'nick' his party's flagship non-dom policy.
The loophole lets foreign nationals who live in Britain but are domiciled overseas avoid paying UK tax on overseas income or capital gains.
Read More: Jeremy Hunt freezes duty on fuel and alcohol as he unveils pre-election 'tax-cutting' Budget
Starmer also welcomed the government's cut to national insurance, but claimed Mr Sunak had broken a promise to cut income tax.
Sir Keir said: "Because we have campaigned to lower the tax burden on working people for the whole Parliament, and we won't stop now, we will support the cuts to national insurance today.
"But I noticed this in 2022 when the Prime Minister was chancellor, he made this promise: 'I can confirm in 2024 for the first time the basic rate of income tax will be cut from 20 to 19 pence'.
"Having briefed that all week, that an income tax cut was coming, that promise is in tatters today."
He also claimed Mr Sunak was overseeing a "Rishi recession" as he hit out at the Government's record on the economy.
The Labour leader said it remains true that taxes are at "a 70-year high" despite the Chancellor's budget, adding: "The British people paying more for less, an unprecedented hit to living standards of working people, the first time they have gone backwards over a Parliament, and they were cheering that today.
"The reason is equally simple, there is no plan for growth. How can there be? He can say 'long-term plan' all he likes," Sir Keir added to jeers from the Prime Minister and Chancellor.
He insisted it was a "statistical sleight of hand" by ministers to claim Britain has grown more quickly than countries like Germany over the last 14 years, telling MPs: "Indeed, in per capita terms, our economy has not grown since the first quarter of 2022, the longest period of stagnation Britain has seen since 1955."
Sir Keir said: "There is nothing technical about working people living in recession for every second the Prime Minister has been in power. This is a Rishi recession."
