Anger against Rachel Reeves' £40 billion 'tax-bomb' Budget grows

Rachel Reeves has ruled out further tax rises. In a bid to head off a growing business revolt over her £40 billion ‘tax-bomb’ Budget, the Chancellor told the CBI conference she was ‘not going to have to come back for more’. 

Ms Reeves was heard in stony silence by business chiefs, who say her National Insurance raid will hit jobs, growth and investment. 

CBI chairman Rupert Soames said business had been treated as a ‘cash cow’ to be ‘milked’. 

The employers’ organisation said two-thirds of its members were slashing their recruitment plans after the Budget, with firms switching to ‘crisis containment’ or ‘damage limitation’ mode. 

Salman Amin, chief executive of the firm behind McVitie’s biscuits, told the conference that the case for investment in the UK was ‘becoming harder to understand’. 

Ms Reeves appeared taken aback by the scale of the business backlash to the Budget. She insisted she had heard ‘no credible alternative’ and claimed the Budget would provide the ‘stability’ needed for growth. 

But the Chancellor appeared to acknowledge that the economy could not withstand another huge tax raid. 

And she warned Cabinet ministers that they would have to ‘live within their means’ as she signalled there would be no further increases in public spending during the next four years. 

She said: ‘Public services now need to live within their means because I’m really clear – I’m not coming back with more borrowing or more taxes.’ It came as:  

• A leading watchdog warned that Labour’s controversial employment rights charter would cost business more than the £5 billion a year claimed by ministers

• Vital reforms to tackle Britain’s growing ‘sicknote culture’ were kicked into the long grass, despite a pledge by Sir Keir Starmer to ‘grip this problem once and for all’

• The Bank of England warned of the need to be ‘vigilant’ about a possible slowdown, with its deputy governor saying there was a ‘further risk that the UK economy proves less resilient than expected’

• Tory leader Kemi Badenoch told the conference that ‘capitalism is not a dirty word’ as she vowed to rebuild her party’s relations with business.

Ms Reeves said business leaders should ‘judge this government on our number one mission to restore growth’, but acknowledged that a revival would not happen ‘overnight’. 

Asked about warnings that the NI rise could cost tens of thousands of jobs in sectors such as retail and hospitality, she said she was ‘not immune to the challenges that businesses face, including the challenges from higher taxes. But the alternative was instability hanging over us for another year’. 

She defended her Budget, saying that ‘difficult decisions’ had been needed. 

The Chancellor repeated her claim that the last Tory government left behind a £22 billion black hole, and said the Budget decisions had ‘wiped the slate clean’. 

She said firms ‘can now be certain that we’re never going to have to do a Budget like that again’. 

But CBI chief Rain Newton-Smith said the NI raid would ‘hit profits, hit competitiveness, hit investment, hit growth’. 

Mr Soames, grandson of Sir Winston Churchill, said that in the election Labour had done an ‘outstanding job of winning the confidence of business and convincing us that, very genuinely, they understand that the solution to our economic ills is investment and growth’. 

But over the coming months, business people would be ‘forming a judgment about what the Government really thinks about business’. 

He urged Labour to take the pressure off business by rowing back on plans for costly new employments rights, saying ministers should be ‘careful how much they whack businesses’ in other ways. 

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Rachel Reeves tells angry business chiefs nobody has 'any alternatives' to her huge Budget tax raid

Mr Soames quoted Churchill’s comments that some ‘regard private enterprise as a predatory tiger, to be shot’, and ‘some regard it as a cow, to be milked’.

He told the Mail: ‘We have been milked, as the Chancellor is entitled to do. It’s her judgment – but they shouldn’t try to dress it up for what it’s not.'

'It’s been treated as the cash cow for the Budget – it is a fact.’ 

Downing Street insisted that lacklustre official growth forecasts published alongside the Budget were not the limit of the Government’s ambitions. 

The PM’s spokesman said Sir Keir and Ms Reeves were ‘not happy with these’, adding: ‘They want higher growth – these forecasts are there to be beaten.’