Introduction to the Budget
Sir Keir Starmer and Rachel Reeves have hinted at tax rises when the Chancellor presents the Budget later this month. In a speech, Ms Reeves will address speculation that an income tax rise will be announced in the much-anticipated statement on November 26.
The Need for Tax Rises
The warnings from the Prime Minister and Chancellor come after reports that the Office for Budget Responsibility is expected to cut its productivity growth forecast for the UK by around 0.3 percentage points. This would require Ms. Reeves to fill a larger financial black hole than expected, possibly up to £30 billion.
Potential Tax Increases
She is reportedly considering a proposal to increase income tax by 2p but cut National Insurance by the same amount. The think tank, a left-leaning, pro-government organization, said the move would raise vital funds while protecting working people.
Priorities for the Budget
Ms Reeves will vow to "make important decisions that will shape our economy in the years to come." Her priorities are reducing the national debt, reducing the cost of living, and protecting the NHS. The budget will be guided by the values of fairness and equal opportunities and is fully focused on the priorities of the British people.
A Difficult Decision
The Chancellor knows how difficult it will be to make these decisions, but argues that she needs to speak to the public about the difficult decisions ahead and the rationale behind her decision-making. MPs will fear a massive backlash if manifesto promises not to raise income tax, as well as VAT and National Insurance, for working people are broken.
Preparing for the Budget
Last night, Sir Keir gave Labor MPs a taste of the future by warning of the need for “tough but fair” decisions. Speaking at a party meeting in Westminster, he said the budget “comes against a difficult economic backdrop.” The Prime Minister said, "It is becoming increasingly clear that the long-term impact of Conservative austerity, its failed Brexit deal, and the pandemic on Britain’s productivity is worse than even we feared."
