Chancellor Rachel Reeves is expected to vow to ‘make the choices necessary’ at the Budget as she grapples with a £20billion to £30billion blackhole in the public finances
Rachel Reeves will promise to protect the NHS and improve the cost of living for struggling Brits in a major pre-Budget speech today.
The Chancellor is expected to vow to “make the choices necessary” as she grapples with a £20billion to £30billion blackhole in the public finances. Ms Reeves, who will deliver her second Budget on November 26, will say the decisions “will shape our economy for years to come”.
It comes just days after Keir Starmer refused to repeat Labour’s vow to protect working people from increases to income tax, VAT, and national insurance. The move has fuelled speculation Ms Reeves will hike income tax at the Budget in what would be a clear breach of the party’s election manifesto.
Speaking from Downing Street today, Ms Reeves will say: “You will all have heard a lot of speculation about the choices I will make. I understand that – these are important choices that will shape our economy for years to come. But it is important that people understand the circumstances we are facing, the principles guiding my choices – and why I believe they will be the right choices for the country.”
READ MORE: Rachel Reeves’ Budget ‘will include tax rises to protect £50bn NHS cash boost’
She will add: “Later this month, I will deliver my second Budget as Chancellor. At that Budget, I will make the choices necessary to deliver strong foundations for our economy – for this year, and years to come. It will be a budget led by this government’s values, of fairness and opportunity and focused squarely on the priorities of the British people: Protecting our NHS, reducing our national debt and improving the cost of living.”
Among targeted action Ms Reeves is considering to help with the cost of living includes reducing the cost of energy bills. The Treasury is looking at cutting the 5% rate of VAT charged on electricity and gas. Estimates suggest this would save the average household around £86-per-year.
Ms Reeves is also urged by a leading think tank to take “decisive steps” in next month’s Budget to put the public finances in order. The Resolution Foundation’s recommendations are closely watched as its former head, Torsten Bell, is now a government pensions minister. Among its recommendations is raising income tax by 2p.
But the think tank also suggests softening the blow by cutting employee national insurance by 2p which, it says, would “protect most working people”.
James Smith, research director at the Resolution Foundation, said: “Switching 2p of employee National Insurance onto Income Tax would raise £6 billion while protecting workers’ wages. Together, this will help to deliver a decisive Budget centred around prices, payslips and poverty reduction, and that shifts the focus away from black holes and back onto boosting growth.”