Budget 2024: Chancellor Rachel Reeves defends £40bn tax rises – ‘everything has to be paid for’
Rachel Reeves has defended raising taxes by the highest amount since 1993 as she said “everything has to be paid for”.
The chancellor announced £40bn worth of tax rises in Wednesday’s budget, with the lion’s share coming from a £25bn increase in employers’ National Insurance contributions.
She told Sky News’ Breakfast With Kay Burley that, unlike the previous Conservative government, she has included everything ministers will spend in their forecast, including £11.8bn compensation for victims of the infected blood scandal and £1.8bn for victims of the Post Office accounting scandal.
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Ms Reeves insisted the tax rises would “fix the foundations and wipe the slate clean” and that this would be a one-off budget.
She added: “As a result of what we’ve done, we’re not going to have to come back and ever do a budget like this again, because we’ve brought everything out into the open.”
The chancellor also admitted growth “is largely unchanged” in the next five years, as revealed by the Office for Budget Responsibility’s (OBR) report on the budget.
But she said that is because she is looking at the economy in the long-term.
She said: “For the first time, the OBR are now looking at economic growth over a longer time frame.
“And that’s really important because often politicians make short-term decisions rather than things that are in the long term interests of the country.”
Ms Reeves said she had to make the tax rises she did, despite promising not to raise taxes beyond Labour’s manifesto, because of “the circumstances that I inherited” from the Conservatives as she repeated they left a £22bn black hole.
“I could have swept that under the carpet and pretended it didn’t exist, or try and raise a bit of money this year and a bit more next year,” she said.
“I didn’t want to do that.
“I wanted to be open and honest, to wipe the slate clean, to put our public finances on a stable trajectory, to make sure that our NHS is properly funded so we can bring down those huge waiting lists.”
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UK’s economic growth forecast
Ms Reeves’ predecessor, the Conservative Party’s Jeremy Hunt, said Wednesday was a “bad day for trust in British politics” and said it will mean “lower pay, lower living standards, higher inflation, higher mortgages” for ordinary families.
He told Sky News: “Because 30 times this year before the election, the chancellor said she had no plans to increase tax outside of what was explicitly written in the Labour manifesto.
“And we had the biggest tax raising budget in British history.”
The shadow chancellor said a Conservative budget would have taken “the harder path” by cutting the number of people on benefits to 2019 levels to fund public services, which he said would release £34bn a year.
He added he does not think “anyone actually believes this £22bn number… but she didn’t increase taxes by £22bn, she increased them by £40bn”.
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“This was not about her legacy. This was a choice,” he added.
“This was the budget that she wanted to do all along. And it’s a legitimate choice. It’s one I disagree with. But if she’d wanted to do that, she should have told us before the election we could have had the debate.”