Reeves refuses to say she will stick to manifesto pledge on tax rises and insists she must face world ‘as it is’ – as it happened | Politics – Beragampengetahuan

It is probably now all but certain that Rachel Reeves will break Labour’s manifesto promises and put up income tax in the budget. That is where the commentariat consensus is, five hours after the chancellor’s speech this morning.

That is not something we can report yet as fact. But the hints in the speech this morning went beyond “the clearest sign yet (that income tax will rise)”, to use one of the essential cliches of political journalism.

There is a category of information where something isn’t quite a fact, but it is so widely assumed to be right that it might just as well be. With her speech this morning Reeves landed the ‘broken manifesto promise’ assumption into this space. If/when it happens on 26 November, we will think we knew that already.

Though she didn’t quite say it explicitly, the combination of weaker economic forecasts from the OBR, and her refusal to make Osborne-style cuts, either in investment or day-to-day spending, points to tax rises in the budget on 26 November.

And she left the door wide open to making those rises in a way that hits more than just those with the “broadest shoulders” – who were noticeably absent from the speech.

“If we are to build the future of Britain together, we will all have to contribute to that effort,” she said. “Each of us must do our bit for the security of our country and the brightness of its future.”

As well as a hint to voters of what is to come – and why – that was meant as a signal to markets that she is prepared to take drastic action, even as far as breaking Labour’s promises, if that is what it takes to stick to her “iron clad” spending rules.

• Sam Fleming and George Parker in the Financial Times say that the speech made it clear that Reeves is “on the cusp” of breaking the Labour manfesto promises on tax. They also say she is partly at fault.

In a speech shot through with attacks on the last government, Reeves decried politicians resorting to “short-term sticking plaster solutions, rather than making long-term economic plans”.

She could easily be blamed for similar sins. Labour came into office claiming that higher growth could fix the deep problems in the public finances and help fund improved public services, a claim that few economists believed was sustainable.

Reeves’ first Budget last October was the biggest tax-raising fiscal event in a generation. Yet she left herself only paper-thin fiscal buffers, leaving the Treasury badly exposed to increases in global interest rates.

Rachel Reeves’ answer to @pippacrerar.bsky.social [see 9.21am] makes it crystal clear that Reeves is headed towards breaking a manifesto pledge on tax and how she will frame it – as a necessary response to “the world as it is” when the alternative would be more cuts or borrowing.

Lots of commentary saying that it’s not clear what the point of the speech is. Seems pretty clear to me. It’s pitchrolling broad based tax rises in the Budget and making sure – as Reeves did with the fiscal rule change in 2024 – that it doesn’t surprise the markets on the day.

Reeves says that she will deal with “the world as it is”, talks about productivity downgrade, rejects further spending cuts and borrowing and says “everyone must contribute” – this is not exactly the Enigma code.

[Reeves’s] defining political judgment is this: that voters are prepared to pay higher taxes for better public services. Polling by Persuasion UK, revealed by my colleague Anoosh Chakelian and studied by the Treasury, shows the public prioritises reduced NHS waiting lists far above Labour’s tax pledges. Reeves today, like Gordon Brown before her in 2002, tied higher taxes to protecting Britain’s “national religion” …

Reeves’s great gamble is that she can yet restore their faith by proving that crumbling public services and economic stagnation are not inevitable. But the risks are considerable: Reform will cry that her tax rises prove that no Labour politician can be trusted; the Tories will charge her with chronic economic mismanagement; the Greens and Lib Dems will ask why she isn’t doing more to tax wealth.

The takeaway is simple: The Treasury wants the message communicated publicly and loudly that they are considering ripping up manifesto promises on tax.

If this really is a bait and switch – raising the prospect of a breach only to surprise everyone by not doing it at the Budget – it is being adopted with gusto.

The simpler theoretical explanation: The manifesto will be broken and the Chancellor is communicating now, well in advance, the argument for why so it beds in.

Reeves volunteering to commandeer the broadcasting apparatus of Downing Street – the specially built news conference room in No 9 – tells you everything about the scale of what she is toying with at the end of the month.

Well, I say everything, not quite. The actual choices, the decisions, including which taxes will go up and by how much, will come at the end of the month.

What we got this morning was the argument, the case for what she will do. One senior figure said to me, think of the news conference as being like the first five pages of the chancellor’s speech on Budget Day, in which she sketches out the economic landscape as she sees it before she announces what she is going to do.

Curious speech from Rachel Reeves. It was billed as an attempt to dampen ‘speculation’ about the Budget, but by confirming taxes will rise without indicating where the pain will hit it looks likely to trigger… more speculation

When it came to the central point, it was addressed in a sentence and a half: “To protect public services from a return to austerity, we will all have to contribute to that effort – each of us must do our bit.”

Thus, she whisked evasively over the only question that matters. People might accept tax rises if they are seen as fair – and part of that fairness means that they have to be accompanied by spending cuts. Without spending cuts, it looks as if she is failing to do everything she can to protect people from the tough decisions. In tough times, it makes sense for government to make do with less.

People might even accept that, if they want decent public services, they have to pay for them. But everyone knows that the disability benefits budget is rising unjustifiably, and that Reeves’s blunt attempt to restrain its growth was thrown out by Labour MPs. An honest chancellor would take that problem head-on and ask Labour MPs to think again before going to the taxpayer for a bailout.

Some takeaways implicit in the Reeves speech.

The deal with the US to raise NHS drug prices is material – £3-4 bn

Fiscal headroom is going up – expect £20bn

The OBR productivity downgrade is material too – £17.5bn

Fuel duty frozen +vat off energy- £5bn

Income tax rise a must

The Chancellor could not say so, but she confronts a £40 bn challenge. NHS/US drug deal, welfare spending, cost of living package, doubled fiscal headroom , productivity downgrade. Yes, income tax must rise.. but perhaps a strategic root and branch review of property taxes?

• Kevin Maguire, the Daily Mirror columnist, thinks the government is about to make a bit misake.

Listening to that Reeves speech I wonder if the UK Government has a death wish.