Chancellor sells Budget for 'strivers' as taxes set to rise

Rachel Reeves has borrowed the language of the former Tory chancellor George Osborne to say her first Budget will be for “strivers” as her party faced a deepening row over the definition of “working people”.

- KATE DEVLIN

Labour has pledged not to raise key taxes, including income tax, VAT or national insurance, on working people. But the government is under mounting pressure to clarify who will be affected after a cabinet minister came under fire for repeatedly refusing to say if a small business owner earning £13,000 a year qualified.

In a sign of how high the stakes are, yesterday Paul Johnson, the director of the highly respected Institute for Fiscal Studies think tank, warned this could be “one of the biggest tax-raising budgets ever”. And former Bank of England governor Mervyn King warned that Ms Reeves’s plans for extra borrowing could drive up mortgage payments.

The chancellor is looking to raise £40bn to avoid a return to austerity after she accused the Conservatives of leaving a £22bn black hole in the public finances. She has warned that her first Budget involved “tough decisions”.

But she said her reforms – which will include investment in projects Labour hopes will kickstart economic growth – were for “hardworking families up and down the country who have been crying out for change”.

“To these people I say, I’ve got your back.... I will deliver for you. It’s a Budget for the strivers,” she wrote in The Sun on Sunday.

Her comments risk a backlash for echoing Mr Osborne’s language, coined in 2012 to defend his austerity measures.