'Labour should have been up front': Former Chancellor condemns ‘biggest tax-raising budget in history’
31 October 2024, 09:11 | Updated: 31 October 2024, 09:20
Former Conservative Chancellor Jeremy Hunt launched a scathing assault on Rachel Reeves' 'shock' Budget this morning, saying families face paying £8,000 more in taxes over the next four years.
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Mr Hunt told Nick Ferrari at Breakfast today that "Labour should have been upfront about what their plans were."
"I do think that in the end they will pay a price for that," he said.
"People don’t like politicians who don’t tell them what they are planning to do. It was worse than expected.
"We said before the election if you vote Labour, taxes over four years are going to go up by about 2,000 per household.
"They are actually going to go up by about £8,000 per household over four years. It’s massively higher than anyone led us to believe. It is a shock."
Asked whether he thought voters had been lied to, he said: "I’m not going to get into that language because I think it’s really bad for politics to do that."
Watch Again: Nick Ferrari is joined by Shadow Chancellor Jeremy Hunt | 31/10/24
Rachel Reeves has said she does not want to repeat the £40 billion tax rises she implemented in her first Budget "ever again".
She accepted this morning in an interview on LBC that workers' pay would be hit by her Budget. The Office for Budget Responsibility has said people will lose out to the tune of £300.
The fiscal announcement was a chance to "wipe the slate clean" following the Conservatives' time in power, the Chancellor told broadcasters as she defended the Budget on Thursday morning.
Read more: Budget 2024: Key points at a glance
Choices made by Ms Reeves will see the overall tax burden reach a record 38.3% of gross domestic product (GDP) in 2027-28, the highest since 1948.
Despite Labour's promises to protect "working people", a £25.7 billion increase in national insurance contributions paid by employers is likely to reduce wages and lead to job losses, something Ms Reeves herself admitted.
Nick pushes Rachel Reeves to explain how she plans to grow the economy
Asked about the consequences of the move, the Chancellor said: "I said that it will have consequences.
"It will mean that businesses will have to absorb some of this through profits and it is likely to mean that wage increases might be slightly less than they otherwise would have been."
Ms Reeves plans to pour more public cash into schools, hospitals, transport and housing - and will change the way government debt is measured to allow her greater borrowing flexibility.
Fiscal watchdog the Office for Budget Responsibility (OBR) has however predicted the measures will be unlikely to lead to the longer term boost in economic growth the Government wants to see.
And influential economics think tank the Institute for Fiscal Studies (IFS) has said she may need to raise taxes again in future if her "gambles" on spending do not result in growth.
"This Budget was to wipe the slate clean after the mismanagement and the cover-up of the previous government," Ms Reeves told Times Radio.
She added: "I had to make big choices. I don't want to repeat a Budget like this ever again, but it was necessary to get our public finances and our public services on a stable trajectory."
The Chancellor was also unable to say whether her pledge at the Budget to raise income tax thresholds after 2028 was guaranteed.
"I'm not going to be able to write future budgets," she said.
Shadow chancellor Jeremy Hunt meanwhile said his counterpart had angered many people, who felt she had not lived up to the spirit of Labour's manifesto promises not to increase taxes for working people.
"Many people thought this was a new Labour prospectus, not a traditional tax-and-spend prospectus, and they have woken up to a Chancellor who has given us the biggest tax-raising Budget in history," Mr Hunt told BBC Breakfast.
The Government's spending measures are expected to provide a temporary boost to GDP, according to the OBR's forecast.
But the watchdog predicted downgrades in subsequent years, and said the Budget measures will add to pressure on inflation and interest rates.
IFS director Paul Johnson warned Ms Reeves may have to come back for "another round of tax rises in a couple of years' time - unless she gets lucky on growth".
Meanwhile, the International Monetary Fund (IMF) endorsed the investment and spending on public services in the Chancellor's Budget, as well as sustainable tax rises.
In an unusual move, the Washington-based watchdog said: "We support the envisaged reduction in the deficit over the medium term, including by sustainably raising revenue."
