Chancellor Rachel Reeves has faced a barrage of criticism following her maiden Budget, which included £40 billion in tax rises. Robert Jenrick, a Tory leadership candidate, labelled Reeves a “compulsive liar” over Labour’s pre-election pledge not to raise taxes.
Jenrick accused Reeves of breaking her promises, saying: “What we saw yesterday was a Halloween horror show. This was the biggest political heist in modern British history. £40 billion of tax rises hurting people across this country and just three months ago the Labour Party won an election on a pledge not to raise taxes.”
Reeves defended the Budget, insisting she had made the “right decisions in the circumstances” she faced. She claimed the Government had inherited a £22 billion “black hole” that needed to be addressed. However, the Office for Budget Responsibility (OBR) has cast doubt on the scale of this inherited deficit.
The Chancellor admitted that her decision to increase employer National Insurance contributions could hit worker pay rises, with the OBR estimating that 76% of the £25 billion increase will result in lower real wages for working people.
Former chancellor Jeremy Hunt said the Budget represented the “biggest ever assault on our economic competitiveness since the 1970s”, warning that “higher tax leads to lower growth.”
Reeves maintained that the tax rises were necessary to “fix the foundations” and put the country’s public finances on a stable footing. But she refused to rule out further hikes to National Insurance contributions over the course of this Parliament.
The Budget has sparked a fierce political debate, with the Conservatives accusing Labour of breaking its election promises and prioritising tax rises over economic growth.
