Reeves fails the credibility take a look at: One can now not take the Chancellor’s pronouncements at face worth, says ALEX BRUMMER

Unfortunately, one can no longer take pronouncements by Rachel Reeves at face value.

The Chancellor’s vow made to the CBI that ‘she would not have to come back for more’ taxes needs to be examined with Talmudic detail.

Keir Starmer and Reeves lost respect in the boardrooms of Britain when they took the decision to punish enterprise and jobs with a £23.8billion hit to be paid by raising employers National Insurance contributions (NIC).

Now Reeves’ words to the CBI are being reinterpreted just 24 hours after they were uttered. 

Business Secretary Jonathan Reynolds explains that there will not be a further tax ask of the business community ‘comparable to what we had to do at the beginning of this parliament’. Surprise, surprise, there may be more to come.

The Labour government circumvented the manifesto pledge not to tamper with NICs by explaining it only applied to working people, so raising taxes on employers was fine.

Jobs tax: Keir Starmer and Chancellor Rachel Reeves (pictured) lost respect in the boardrooms of Britain with their £23.8bn hit to be paid by raising employers NI contributions

Yet it is more than clear from most of Britain’s biggest employers – such as Tesco and the Royal Mail – that working people will pay the price. 

A combination of hiring freezes, lost jobs and higher prices means that workers will be hard hit. 

Higher NICs will make it much harder for the Government to complete a mission of encouraging Britain’s army of 9.2m people (including 2.8m long-term sick) of economically inactive citizens back into the workforce.

The notion that there was ‘no alternative’ but to heap £40billion of extra taxes on Britain, with business lumbered with the lion’s share, is fanciful. 

Ministers may have been instructed (they still do it in every interview) to repeat the calumny that there was a £22billion black hole in the public finances. 

However, some £9.4billion of this was a result of unconditional public pay settlements.

Hitting employers was not the only choice. A Musk-style government efficiency drive might have been one solution. 

Reeves could have backtracked on the Tories’ last cut in employees’ National Insurance. Fuel duties could have risen as part of the green agenda and so on.

Instead of heaping funds into the NHS before reforms have been cemented, the extra spend could have been phased.

The economy was doing nicely until the tax rises came along.

By destroying confidence, output has been slowed, potential tax revenues sacrificed and the interest bill on the national debt increased.

Reeves’ CBI pledge not to raise taxes was naïve from someone who claims strong economic credentials. We live in uncertain times.

Harold Macmillan’s quote ‘Events, dear boy, events’ made in 1984, is as relevant today as it has ever been. The public finances were blown off course by the great financial crisis, the pandemic and Russia’s war on Ukraine.

There is no shortage of geo-political shocks to contemplate, such as hostilities in the South China sea, trade wars, further conflict in the Middle East and dislocation caused by climate change.

Only yesterday, Vauxhall ended more than a century of carmaking at Luton. There were high hopes for Reeves when she took office, and a desire to see stability restored after the roller-coaster ride of the Tories.

It has taken just five months to dismantle the credibility so critical to growth.

Bankers’ feast

Liz Truss’s credibility was destroyed in a few short days after her tax-cutting mini-Budget. Among the factors which cost her dearly was a decision to lower the top rate of income tax and abolish restrictions on bankers’ bonuses in one statement.

Her intention to encourage enterprise was a noble cause. But the combination of the two was seen by Labour as a giveaway to rich City grandees who were responsible for the great financial crisis.

Now that Labour is in power, the importance of finance to Britain’s efforts to rekindle output has become obvious.

Taking advantage of the freedoms granted by Brexit, the Bank of England is seeking to underpin London as Europe’s financial hub by allowing faster access to earned bonuses. 

The new rules proposed mean that bankers will be able to receive some of their bonuses in year one instead of having to wait three years.

The Old Lady, at least, is embracing a growth and competitiveness agenda.