Rachel Reeves is set to announce a series of tax increases in a Budget on October 30, after criticizing the Tories for £22bn of unfunded spending.
Releasing a Treasury report that highlighted the allegedly dire state of public finances, she stated: “They spent like there was no tomorrow because they knew that someone else would pick up the bill.”
Ms. Reeves reaffirmed the Government’s manifesto pledge to avoid tax increases on national insurance, income tax, and VAT. However, there is speculation that she may raise the capital gains tax rate and make changes to inheritance tax and pension tax relief to increase revenue.
Scheduling the Budget for late October allows the Chancellor time to benefit from potential economic improvements. The Bank of England is expected to cut rates from the current 5.25% level at least once before October 30, possibly as soon as this week. Many market analysts anticipate a second rate cut by early November.
The Chancellor announced the date for her first fiscal event during a statement in the Commons.
Paul Johnson, director of the Institute for Fiscal Studies, told the BBC: “It is very striking that if this problem is about £20 billion big, that is exactly the scale of the national insurance cuts implemented by Jeremy Hunt just before the election. Now, if those cuts were implemented knowing there was this kind of hole, that is not good policy to put it mildly.”
The Tories have accused Ms. Reeves of trying to “set a narrative for tax rises.”
Shadow transport secretary Helen Whately said Labour had inherited a “strong economic legacy” from the Tories but admitted there are “always pressures on finances.”
