Chancellor refuses FOUR times to repeat 'no more tax rises' promise

Rachel Reeves opened the door to a new wave of tax rises yesterday – just a week after ruling them out.

During exchanges in the Commons, the Chancellor refused to repeat her claim last week that she would not be ‘coming back for more’ tax.

Labour’s Budget in October was the biggest tax-raiser in history, with £40billion of new levies. 

It was met with a business backlash, with firms warning a £25billion rise in employers’ National Insurance will cost jobs, raise prices and force closures.

Ms Reeves tried to defuse the row over her Budget last week by saying she would not require further tax rises before the next election.

‘I’m really clear I’m not coming back with more borrowing or more taxes,’ she told the Confederation of British Industry (CBI).

But No 10 has distanced itself from the remarks, and in the Commons yesterday Ms Reeves four times refused to repeat the pledge.

Reeves hit by slump in productivity

The Chancellor faces a potential multi-billion pound black hole as figures showed the productivity crisis is worse than feared amid a surge in migration.

The Office for National Statistics revealed output per hour worked – a key productivity measure – fell by 0.9 per cent in the second quarter of this year compared to 2023. That was worse than the reported 0.3 per cent.

If the forecast is revised down it will narrow Rachel Reeves’ ‘headroom’ to balance the books and create a black hole worth tens of billions of pounds.

In contrast the Office for Budget Responsibility predicts productivity will grow by 1 per cent or more from 2025 to 2029 – and half a per cent lower annual growth in productivity would add £40billion to the borrowing bill. Kallum Pickering, at broker Peel Hunt, suggested the increase in population could result in a rise in the number of taxpayers.

Shadow Chancellor Mel Stride asked her whether Downing Street had ‘changed its mind’, or if she ‘spoke without thinking’ when she told business chiefs she would not repeat her Budget hikes.

Ms Reeves said she had been left to deal with a £22billion ‘black hole’, adding: ‘So we did have to raise taxes to fund our public services, but never again will we have to repeat a Budget like that, because we have now wiped the slate clean and drawn a line under the mess created by the last government.’

Asked again to rule out further tax rises, she added: ‘No chancellor is going to write five years’ worth of Budget in their first five months, but what I can say is that we will never have to deliver a Budget like that again.’

Shadow Treasury minister Richard Fuller said the Chancellor’s apparent backtracking would ‘undermine business confidence’.

He added: ‘She told the CBI last week there would be no more borrowing and no more taxes. Days later the business secretary and then the Prime Minister refused to stand by what she said. Now even she cannot repeat her own words.’

But Ms Reeves later suggested she could not close down the possibility of tax rises to deal with a national emergency.

Speaking at the Yorkshire Post’s Great Northern Conference in Hull, she told reporters: ‘I can’t write five years’ worth of Budgets in just five months. We don’t know what might happen in the future in terms of shocks to the economy, but I can give businesses the confidence in this Budget that we have wiped the slate clean, we will never have to do a budget like this again.’

She said public services would have to ‘live within’ the spending ‘envelope’ set out at the Budget rather than relying on extra tax rises in the future.