Reeves’ Pre-Budget Speech Leaves Tax Rise Uncertain

In an unusual pre-budget speech in Downing Street, Reeves did not rule out a U-turn on the Labour Party's general election manifesto promise not to increase income tax, VAT, or national insurance.

When reporters explicitly asked if the government was going to break that promise, she did not answer directly, but said she was "setting the context for the budget."

Shadow Chancellor Sir Mel Stride said the "emergency" speech had "confirmed the fears of households and businesses that taxes were going to rise." He added that if Reeves "breaks her promise and raises taxes again, she will have to go."If there were any doubts about tax increases before this speech, there are none now.

Yet, when asked which taxes might be increased, Reeves refused to elaborate.

Instead, she set about explaining why, a year after presenting a tax-raising budget and vowing not to raise taxes again, she was actually imposing more taxes.The chancellor said she would do what is necessary, not what is popular.

The reasons she gave were poor productivity, for which she blamed Conservative government policy including Brexit, austerity and short-sighted decisions to cut infrastructure spending, persistently high global inflation and the uncertainty unleashed by Donald Trump's tariffs.

In short, Reeves' argument is that the failings of others are being visited upon this government, and that it falls to her to confront decisions her predecessors ducked.

She pledged to come up with a "Budget for growth with fairness at its heart" aimed at bringing down NHS waiting lists, the national debt and the cost of living.

"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," she said.

Daisy Cooper, Treasury spokesperson for the Liberal Democrats, said: "It's clear that this Budget will be a bitter pill to swallow as the government seems to have run out of excuses."

Some in the government want this to be a one-time budget, as they don't want to implement it repeatedly every year, allowing them to collect a little more in taxes to meet the independent forecasting requirements.

This is being seen as an argument for raising billions of pounds by raising at least one rate of income tax.

However, this would be a major political risk, especially when public trust in politics in general, and in Prime Minister Sir Keir Starmer in particular, is so low.

There is also the question of whether the Prime Minister and Chancellor will be able to argue that none of this could have been imagined before last year's budget.

This comes after the Resolution Foundation, which has strong ties to Labour and was previously run by Treasury Minister Torsten Bell, said that avoiding changes to VAT, NI, or income tax would "do more harm than good."