‘We’re going to have to increase taxes’, says Reeves, but rules out rises to VAT, National Insurance and income tax

31 July 2024, 07:35

By Kieran Kelly

@kellyjourno

The Chancellor has conceded for the first time that she is planning to raise taxes in October’s Budget. 

Rachel Reeves gave a statement to the House of Commons on Monday in which she revealed a £22bn ‘black hole’ in the public finances. 

Ms Reeves says the previous Conservative government allocated money for programmes that it did not have, revealing a series of measures to plug the black hole. 

This included removing the winter fuel allowance for millions of pensioners not in receipt of pension credit. 

But speaking to The News Agents podcast, Ms Reeves went a step further, revealing that she has plans to hike taxes this October. 

Asked by Jon Sopel if she will raise taxes, Ms Reeves said simply: “I think that we will have to increase taxes in The Budget.” 

She continued: “We had in our manifesto a commitment to fiscal rules to balance day-to-day spending through tax receipts, and by the end of the forecast period, to get debt down as a share of GDP. 

Read More: Winter fuel payments scrapped for millions of pensioners as Rachel Reeves reveals cuts to fill 'black hole'

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“Those are sensible fiscal rules to keep a grip of the public finances. We also made other commitments in our manifesto, not to increase National Insurance, VAT, or Income Tax for the duration and we’ll stick with those.”

Ms Reeves then refused to rule out changes to inheritance tax, pension reform or capital gains tax. 

“We will have a Budget on the 30th of October and ahead of that Budget, we will have a forecast by the Office of Budget Responsibility on this occasion, based on accurate numbers,” she said.

Watch Again: Chancellor Rachel Reeves speaks to Nick Ferrari | 30/07/24

Pressed that there may be raises in Inheritance Tax, Capital Gains Tax and pension reforms, the Chancellor said: “We stick by everything in our manifesto. But I'm not going to start to write a Budget, we're now beginning the process of a Budget and a Spending Review, and I'll report to The House on the 30th of October.”

Ms Reeves also called on the Shadow Chancellor, Jeremy Hunt, to apologise for leaving the £22bn black hole.

“I think that it is the government that needs to take responsibility. I'm now Chancellor of the Exchequer and if mistakes are made in this department, I will own those mistakes, not civil servants.

“Civil servants don't have an external voice and civil servants don't make decisions ministers do. And the former Chancellor should take responsibility for his actions, and he should apologise to the country for knowingly, repeatedly, and deliberately misleading us.”