Labour said 'we don't need higher taxes'... 141 days before £40bn hike

Just 141 days before her £40billion 'tax bomb' took the burden on Brits to the highest level ever, Rachel Reeves told voters: 'We don't need higher taxes.'

The Chancellor's words from June 11 this year are being widely shared as evidence of Labour's general election 'dishonesty'.

Less than a month before the party won power, Ms Reeves also told voters she had 'no plans' to raise taxes beyond the £8.5billion of rises set out in Labour's manifesto.

This was despite her saying she was under 'no illusions' about the state of the economy and public finances she was pitching to inherit.

Those comments stand in stark contrast to her actions yesterday as she unveiled £40billion of tax rises during her first Budget as Chancellor.

In full: How Rachel Reeves told Brits (before becoming Chancellor) 'we don't need higher taxes'  

Rachel Reeves once told Brits she had 'no plans' to raise taxes beyond the £8.5billion of rises set out in Labour's manifesto.

On 11 June this year, less than a month before the general election, the Chancellor was quizzed by a Bloomberg reporter about her tax promises.

Here's the full exchange:

Reporter: 'Labour has ruled out increasing income tax, VAT, corporation tax, national insurance.

'But you use this language of 'having no plans' when asked about capital gains tax, wealth taxes, other property taxes, inheritance tax.

'Do you use the words 'no plans' because it gives you the space in government to then say: 'Well, we didn't have plans then, but we do have plans now, because we've seen the state of the public finances, and we see that this is necessary to fix public services'?'

Ms Reeves: 'No, I'm under no illusions about the scale of the challenge that I will face.

'I don't need to become Chancellor to know what a mess the government has made of public finances, of public services, and the fact the tax burden is at its highest level in 70 years.

'We don't need higher taxes, what we need is growth. I don't want to and I have no plans to increase any taxes beyond those which we have already set out.

'The VAT and business rates on private schools, the extension of the windfall tax, the changes about how private equity bosses are taxed and the policies that we have announced, on non-doms as well.

'Those are the only changes to tax that we need to fund our plans. I'm very clear about that.

'I want to grow our economy because that is the only way that we can sustainably improve living standards, have the money for public services, and also keep taxes as low as we possibly can.

'That is what I am determined to do, to grow the economy, not to do what the Conservatives have done, which is to increase taxes 26 times, including capital gains tax, during the course of this Parliament. Taxes are at a 70 year high.

'I do not want the tax burden to rise further. I want the tax burden to fall.'

The Office for Budget Responsibility (OBR) watchdog said Ms Reeves' Budget measures will take the tax burden to a record 38 per cent of GDP.

They also cut forecasts for economic growth in later years of this decade, making a mockery of Ms Reeves' bid to be 'the most pro-growth Chancellor in history'.

And they predicted the Chancellor's Budget measures would fuel inflation, push up mortgage rates and squeeze wages.

Ms Reeves' has defended her decision to hike taxes to their highest level in history by claiming she inherited a £22billion 'black hole' in the public finances.

'Look, what alternative was there?,' she told BBC Radio 4's Today programme this morning.

'We had a £22 billion black hole in the public finances.'

She added: 'We had to increase taxes yesterday. I did not want to increase the key taxes that working people pay: income tax, VAT and employee national insurance. So we have increased national insurance on employers.'

But the Tories have shot back by highlighting how the OBR failed to back up the Chancellor's claims.

A new report by the watchdog uncovered £9.5billion of spending pressures it was not made aware of prior to ex-chancellor Jeremy Hunt's Budget in March.

But OBR chair Richard Hughes said nothing in the review it published yesterday 'was a legitimisation of that £22billion'.

Ms Reeves is also facing claims of breaking a Labour manifesto pledge after she used her Budget to make a £25billion raid on employers' national insurance.

Prior to the election, Labour said they would 'not increase taxes on working people, which is why we will not increase national insurance, the basic, higher, or additional rates of income tax, or VAT'.

In a social media post on 4 June, a month before the general election, Ms Reeves wrote: 'I didn't come into politics to raise taxes on working people. Labour will not put up your income tax, national insurance or VAT.'

But the Chancellor has since insisted Labour's pledge to not raise main taxes on 'working people' applied only to employees' national insurance, which is not being increased.

Ms Reeves' has now been accused of 'lying' about her tax plans prior to winning power, with Tory leader Rishi Sunak saying Labour had 'not been straight with the British people'.

He told the House of Commons yesterday in response to the Budget: 'We Conservatives warned that a Labour Government would tax, borrow and spend far beyond what they were telling the country.

'And time and again they denied they had such plans. Today, the truth has come out - proof that Labour planned to do this all along.'

He added: 'They have fiddled the figures and raised tax to record levels. They have broken their promises, and it is the working people of this country who will pay the price.'

During a round of TV and radio interviews this morning, Ms Reeves admitted her tax raid on businesses could see firms give out smaller pay rises to workers.

She told BBC Breakfast: 'I said that it will have consequences.

'It will mean that businesses will have to absorb some of this through profits and it is likely to mean that wage increases might be slightly less than they otherwise would have been.

'But, overall, the OBR forecast that household incomes will increase during this Parliament.

'That is a world away from the last Parliament, which was the worst Parliament ever for living standards.'

Tory MP Chris Philp, a former Treasury minister, has accused Labour of 'election dishonesty' with their tax promises.

'Labour has no excuse,' he wrote in an article for the ConservativeHome website.

'They lied to the British public during the election by pretending there were no substantial tax increases coming in order to win votes.

'Now it turns out there will be, and a lot of people will regret ever voting Labour.'