Rachel Reeves has justified the elevation of taxes at the highest rate since 1993, stating, “everything has to be financed.”
The Chancellor unveiled £40 billion in tax hikes in Wednesday’s budget, predominantly arising from a £25 billion rise in National Insurance contributions from employers.
In an interview with Sky News’ Breakfast With Kay Burley, Ms. Reeves declared that, in contrast to the previous Conservative administration, she has accounted for all expenditures in the ministers’ forecasts, including £11.8 billion in compensation for those affected by the infected blood scandal and £1.8 billion for the victims of the Post Office accounting issue.
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Ms. Reeves asserted that these tax increases would “repair the foundations and clear the slate,” emphasizing that this will be a singular budgetary action.
She elaborated, “Our actions mean that we won’t need to revisit a budget like this again, since we have brought everything into the open.”
The Chancellor also acknowledged that growth “remains largely unchanged” in the next five years, as indicated by the Office for Budget Responsibility’s (OBR) budget report.
However, she stated that this is due to her focus on the long-term economic landscape.
She expressed, “For the first time, the OBR is assessing economic growth over an extended period.”
“This is crucial because often politicians prioritize short-term decisions rather than what is in the nation’s long-term interests.”
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‘Raising taxes was not an easy decision’
Ms. Reeves mentioned that she felt compelled to initiate the tax increases, despite her commitment not to exceed Labour’s manifesto promises, due to “the conditions I inherited” from the Conservatives, reiterating that they left a £22 billion deficit.
“I could have ignored that and acted as if it were nonexistent, or tried to generate a bit of revenue this year and a bit more the next year,” she remarked.
“I did not wish to do that.”
“My intention was to be transparent and forthright, to start anew, to establish a stable trajectory for our public finances, and to ensure the NHS is sufficiently funded to reduce those substantial waiting lists.”
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UK’s economic growth projection
Ms. Reeves’ predecessor, Conservative Jeremy Hunt, remarked that Wednesday represented a “poor day for trust in British politics,” suggesting it would result in “diminished pay, lower living standards, increased inflation, and higher mortgages” for average families.
He informed Sky News: “Because 30 times this year prior to the election, the Chancellor stated she had no intentions of raising taxes beyond those explicitly established in the Labour manifesto.”
“And we witnessed the largest tax-increasing budget in British history.”
The shadow Chancellor indicated that a Conservative budget would have taken “the more challenging route” by reducing the number of people reliant on benefits to 2019 levels to finance public services, which he claimed would free up £34 billion annually.
He further asserted that he does not believe “anyone genuinely trusts this £22 billion figure… yet she did not elevate taxes by £22 billion, she raised them by £40 billion.”
“This was not about her legacy. This was a decision,” he concluded.
“This was the budget she intended to implement from the start. It is a legitimate choice, although one I disagree with. Nevertheless, had she desired to take this course, she should have alerted us before the election so that we could have had the discourse.”
