Who will pick up the tab as Reeves looks to raise taxes?

As Rachel Reeves prepares to unveil her first Budget, a clear picture is emerging of how she intends to raise the money to ensure there is not another wave of austerity.

- DAVID MADDOX

Reeves’s hands are tied, to a certain extent, because of pledges not to raise the current rates of VAT, income tax, national insurance and corporation tax. But after she promised “no new austerity”, there are other means of raising the much-needed revenue, and her choices on 30 October will say a lot about the philosophy of a government that preaches the need for economic growth.

Reeves has a £40bn problem

The context of this Budget is that the chancellor has told her colleagues around the cabinet table that, to avoid austerity measures, she needs to find at least £40bn in savings and tax rises just to stand still. On top of this, it seems that Labour has agreed to plough around £10bn extra into the NHS.

Reeves has ruled out raising national insurance, income tax, VAT, and, just last week, corporation tax. Already she claims to have found a £22bn black hole left by the Tories. But she has also said that her priority is economic growth.

Privately ministers have admitted that the government will stand or fall on achieving economic growth, because this is how public services and investment will be paid for in the future. However, no chancellor has hiked taxes by £25bn or more and achieved economic growth. Instead, Reeves seems mostly to be betting on planning reform and economic stability to deliver it.

‘No taxes on working people’