Prime Minister Sir Keir Starmer will give his backing to the chancellor’s Budget in a speech on Monday, and commit the government to going “further and faster” on pro-growth measures.
He will say Chancellor Rachel Reeves’s statement will help to alleviate cost of living pressures, lower inflation and ensure economic stability.
It comes as the Treasury faces questions over whether it was transparent about the state of the public finances in the run-up to the Budget.
No 10 has denied that Reeves misled voters and defended her statement.
Despite the Office for Budget Responsibility (OBR) downgrading growth from next year, the prime minister will argue that “economic growth is beating forecasts”, but the government must do more to encourage it.
Protecting investment and public services will further drive financial growth, Sir Keir is expected to say.
He will call for reform in the sector and an urgent correction to “fundamentally misguided environmental regulation”.
Business Secretary Peter Kyle is to be tasked with applying the lessons of the nuclear power report to infrastructure more widely.
The prime minister’s speech on Monday, just five days after the Budget, may suggest some nervousness over how the government’s economic plans have been received by the public, though No 10 say a statement was already planned.
In the days since the Budget, Downing Street has been forced to publicly back Reeves after she was accused by political opponents of repeatedly warning about a downgrade to the UK’s economic productivity forecasts, paving the way for tax hikes.
In a letter to MPs sent on Friday, the chairman of the OBR revealed that he told the chancellor on 17 September that the public finances were in better shape than widely thought.
The Conservatives have accused Reeves of giving an overly pessimistic impression of the public finances as a “smokescreen” to raise taxes.
Tory leader Kemi Badenoch said the letter showed Reeves had “lied to the public” and should be sacked.
Last week, a spokesperson for the Treasury said: “We are not going to get into the OBR’s processes or speculate on how that relates to the internal decision‑making in the build‑up to a Budget, but the chancellor made her choices to cut the cost of living, cut hospital waiting lists and double headroom to cut the cost of our debt.”
Both the chancellor and Badenoch are scheduled to appear on the BBC’s Sunday with Laura Kuenssberg programme.
Rachel Reeves has urged Labour MPs to unite behind her Budget as she vowed to stay on as chancellor in the years ahead.
Speaking to a meeting of Labour’s Parliamentary Party on Monday evening, Reeves warned MPs they must “stick together” if they wanted to win the next election.
The Budget, which is expected to contain tax rises, will be delivered on Wednesday following weeks of speculation.
Reeves said she thought Labour MPs would like 90-95% of her spending plan but warned they would have to accept the tougher measures as well saying: “It’s a package, not a pick-and-mix. You can’t say you like the cola bottles but you don’t like the fruit salad.”
“It all comes together and hangs together as a whole.”
She said her three priorities would be: “Cutting the cost of living, cutting NHS waiting lists and cutting the cost of debt.”
Following the meeting, one Labour MP said the chancellor had been “strong and honest” but another said her pleas for unity had sounded “desperate”.
In the year since the last Budget, Labour MPs have become increasingly critical of Reeves’ judgement.
The Chancellor has been forced to make U-turns on some policies, including cutting the winter fuel payment.
There had also been concerns in the party about suggestions she would use this Budget to raise income tax rates, a move that would have broken the party’s election manifesto promise.
Instead, it could consider extending the freeze on the levels at which people start to pay income tax, meaning more people are drawn into paying more tax on their wages and pensions over time.
The chancellor could also look at a range of smaller measures to raise money including new taxes on high-value homes in England, electric vehicles and gaming companies.
She needs to find more money in order to meet her own rules aimed at reducing debt and borrowing.
Reeves has also suggested she will scrap the two-child benefit cap, which limits the benefits parents can claim for their third child or subsequent children born after 6 April 2017.
Conservative shadow chancellor Mel Stride said he worried the Budget would see “tax on hard- pressed hard-working people being transferred into the benefits system”.
Speaking at a conference on Monday, head of the Confederation of British Industry Rain Newton-Smith urged Reeves not to inflict “death by a thousand taxes” on businesses.
She said the chancellor should have “the courage to take two tough decisions rather than 20 easier ones”.
Liberal Democrat Treasury spokesperson Daisy Cooper accused the government of “rank hypocrisy” over its potential tax plans.
“Rachel Reeves once accused the Conservatives of ‘picking the pockets’ of working people by freezing tax thresholds – now Labour plans to do exactly the same,” she said.
Budget week is upon us and many of Monday’s papers focus on Chancellor Rachel Reeves’s upcoming statement on Wednesday. The Metro writes that repeated leaks in the build-up to the Budget have damaged the economy. It quotes Bank of England chief economist Andy Haldane as saying there is “paralysis among businesses and consumers” due to a flurry of reports about its contents in recent weeks.
The Daily Express says pensioners will “lose £800 a year” if the Chancellor does not lift income tax thresholds. The paper reports that Reeves is expected to keep the tax-free allowance at its current level until 2030, extending a freeze first introduced by the previous Conservatives government and is due to expire in 2028. That would mean some people on state pensions being forecast to pay tax on part of their pension when the allowance increases as expected next year.
The Mirror leads with a poll suggesting some want Reeves to “hit the super-rich in her autumn budget”. The Labour-supporting paper reports on a poll conducted by centre-left campaign group 38 Degrees, which indicates that “64% of voters back tax hikes on wealth”.
The Chancellor is “set to target universities” in the Budget according to the i Newspaper. Plans to raise international student fees to fund “grants for poorer British students” have been floated ahead of the statement, the paper says.
The Daily Telegraph says £15bn in extra welfare spending will be included in the Budget, which leads with reports Reeves plans to scrap the two-child benefit cap and confirm increases to other benefits and pensions. The proposals will be “funded by a tax raid on the middle classes”, the paper reports, referring to an expected extensions to the thresholds freeze.
The Times reports that the chancellor plans to “hit more than 100,000 of Britain’s most expensive properties with a surcharge worth an average of £4,500”. The property tax was initially slated to apply to properties worth at least £1.5 million, but the Treasury is now looking at a £2 million threshold, according to the paper, due to concerns it could have impacted people who are “asset rich but cash poor”.
The Confederation of British Industry (CBI) says businesses face “death by a thousand taxes”, the Independent reports. It refers to comments made by the group’s director, Rain Newtown-Smith, who said the “UK risks a Groundhog Day scenario in which politics is more important than growth”.
Meanwhile, the Financial Times leads with the latest on US efforts to mediate a deal between Ukraine and Russia to end the war. It focuses on comments by Donald Trump, who said Kyiv had shown “zero gratitude” to Washington. However, the White House later said the Geneva talks had been a success and there had been progress.
The Guardians claims the BBC is planning to “overhaul the way it investigates editorial concerns”. It says the broadcaster will create a new deputy director general as part of its response to a row which saw two of its most senior leaders quit this month. The BBC has not commented on the Guardian’s story.
The Daily Mail leads on Lord David Cameron’s revelation that he was diagnosed with and successfully treated for prostate cancer in 2022. The paper says the former prime minister was initially encouraged by his wife Samantha Cameron to get a prostate test after listening to a BBC radio interview. Lord Cameron now supports “targeted screening”, the paper says.
Strictly Come Dancing’s Shirley Ballas “almost died” after choking on a fishbone moments before Saturday’s live show, the Sun reports. The paper says the 65-year-old “struggled to breathe for 20 minutes backstage in Blackpool”.
And finally, the Daily Star continues its campaign for viewers to get behind former model Kelly Brooks on I’m a Celebrity… Get Me Out of Here.
Laura KuenssbergPresenter, Sunday with Laura Kuenssberg
BBC
It’s been a long time coming. If you feel like this Budget has been going on for ages, you’d be right.
Not just because by one senior MP’s count, 13 – yes, thirteen – different tax proposals have already been floated by the government in advance of the final decisions being made public.
Or because of an ever-growing pile of reports from different think tanks or research groups making helpful suggestions that have grabbed headlines too.
But because the budget process itself has actually been going on for months.
Back in July the Chancellor Rachel Reeves had the first meeting with aides in her Treasury office to start the planning.
“Everyone was getting ready to open up the Excel,” one aide recalls, but Reeves announced she didn’t want any spreadsheets or Treasury scorecards.
Instead she wanted to start by working out how to pursue her top three priorities, which she scribbled down on A5 Treasury headed paper.
That trio is what she’ll stick to next week: cut the cost of living, cut NHS waiting lists, and cut the national debt.
The messages to the voting public – and each containing an implicit message to the mighty financial markets: control inflation, keep spending big on public services, protecting long-term cash on things like infrastructure, and try to control spending to deal with the country’s big, fat, pile of debt.
Reeves’s team is confident the chancellor will be able to tick all three of those boxes on Wednesday.
But there is deep fear in her party, and scepticism among her rivals and in business, that instead, Reeves’s second budget will be hampered by political constraints and contradictions.
Getty Images
The red briefcase moment at last year’s Budget
Reeves herself will no doubt refer to the restrictions placed on her before she had even walked through the door at No 11 as chancellor.
Big debts. High taxes. Years of squeezed spending in some areas leaving some parts of the public services threadbare. The arguments about the past may wear thin.
“Everyone accepts we inherited a bad position,” one senior Labour figure told me, “but it’s only right that people expect to see things improve.”
Some of the constraints on Reeves’s choices are tighter because of Labour itself.
There’s the original election manifesto pledge to avoid raising the three big taxes – income tax, National Insurance and VAT – cutting off big earners for the Treasury coffers.
Then what’s accepted in most government circles now as the real-world effect of the government’s early doom-laden messages: things will get worse before they get better.
In the budget last year, Reeves chose only to leave herself £9bn of what’s called “headroom” – in other words a bit of cash to cushion the government if times are tougher than hoped, which is, indeed, what has come to pass.
One former Treasury minister, Lord Bridges, told the Lords: “This is not a fiscal buffer; it is a fiscal wafer, so thin and fragile that it will snap at the slightest tap.”
Well, it has been snapped by the official number-crunchers, the Office for Budget Responsibility, calculating that the economy is working less well than previously thought, which leaves the chancellor short of cash.
The size of the debts the country is already carrying mean the markets don’t want her to borrow any more.
But most importantly perhaps, limits on what is possible for Reeves on cuts, spending or borrowing stem from the biggest political fact right now: this government is not popular with its own backbenchers, and it doesn’t always feel like the leadership’s in charge.
Downing Street has already shown it is willing to ditch plans that could save lots of money if the rank and file kick off vigorously enough.
Prime Minister Sir Keir Starmer and Reeves were forced to ditch cuts to the winter fuel allowance in 2024, and to welfare earlier this year. And there is also an expectation that extra cash is on the way.
One senior MP told me: “They need to increase the headroom, do something big on energy costs, and they have to do something for the soft left on [the] two-child cap – they have walked people up the hill.”
It will be expensive, but Labour MPs have been led to expect at least some of the limits on benefits for big families to be reversed, and help with energy bills.
For some members of the government it is deeply, deeply frustrating. One told me Labour backbenchers “want everything for nothing – we should be the adults driving the car, not the kids in the back”.
On Friday, as Reeves received the final numbers for her big budget moment, multiple sources pointed to other decisions the government has made that make her job harder – areas where Labour has appeared to contradict or confuse – and even undermine – its own ambitions.
On some occasions, the chancellor, backed by the prime minister, will say that getting the economy growing, helping business, is their absolute number one priority.
But their early choice to make it more expensive for companies to hire extra staff, by hiking National Insurance, was seen by many firms to point in the entirely opposite direction, and many report that pricier staff costs make growing their business much harder.
Ministers might have talked up their hope of slashing regulation: with more than 80 different regulators setting rules, you can see why.
Yet significant new protections for workers are being introduced, which means more rules.
Labour preached they’d offer political stability after years of Tory chaos. We are not in the realms of the party spinning through prime ministers at a rate of knots, at least not yet.
But endless reorganisations in No 10, very public questions about Sir Keir’s leadership, and fever pitch speculation about impending budget decisions do not match the stated aims that Sir Keir was meant to end the drama.
Late on Friday there were still negotiations in Whitehall over whether to make the tax on oil and gas companies less brutal, with some ministers arguing to soften the edges so that firms don’t pull out of the North Sea, taking their future investments in renewable energy elsewhere.
The contradiction being that Labour promises there’ll be savings on bills and thousands of jobs on offer if energy firms move faster to green power.
But the tax, which they increased last year, could drive some of those same companies away, and with it the promise of future growth. No government has complete purity of policy across the board.
In an organisation that spends more than a trillion pounds a year and makes thousands of decisions every week, it’s daft to imagine they can all be perfectly in line with a broader goal.
But even on Sir Keir’s own side, as we’ve talked about many times, a common complaint about this government is a lack of clarity about its overall purpose.
One frustrated senior figure told me recently sometimes they wonder: “What are we all actually doing here?”
Pressure from the markets means it’s hard for the chancellor to borrow any more. Labour’s backbenchers would be allergic to any chunky spending cuts. And big tax rises aren’t exactly top of the list for a restless public with an unpopular government.
The realities of politics can often make it hard for governments to make smart economic choices. The realities of economics can often make it hard for governments to make the best political decision.
On Wednesday, Reeves will have to credibly combine the two, with a set of choices that will shape this troubled government’s future.
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Several papers lead on the aftermath of a speech by the Chancellor Rachel Reeves, in which she did not rule out a U-turn on Labour’s manifesto general election pledge not to hike income tax. Despite the chancellor saying she will make “necessary choices” in the Budget, Conservative leader Kemi Badenoch says Britain watched the speech “in horror” and that Reeves is “blaming every else” for chaos, according to the Daily Express.
A hike in income tax would be the first since 1975, and break a “50-year taboo” against the policy, the i Paper reports. Economists cited by the paper say Reeves must add 2p on income tax if she wants to make the UK’s public finances “more resilient, and avoid having to return for more” in the near future.
“We will all have to do our bit” is the chancellor’s quote featured in the Times. The paper reports more lines from Reeves’ speech where she vowed to put “national interests” before “political expediency”. Elsewhere, a photo of Sir David Beckham receiving his knighthood at Windsor Castle is front and centre.
“Reeves’s waffle bomb” is the Daily Mail’s take. The paper also reports that Labour has been accused of “educational vandalism” after ministers announced they would scrap a number of Tory reforms on education. The changes will include cutting GCSE exams and simplify primary school tests. “Labour dumbs down schools” is the headline.
“Make it fair, Rachel” is the Daily Mirror’s headline as it leads with a plea from trade unions to the chancellor, calling on her to tax the wealthiest before targeting ordinary workers. Sharing the top spot, “bend a knee like Beckham” is the paper’s take on Sir David Beckham’s knighthood.
The Daily Star’s headline is “Rach sparks tax rise fury”, as it reports on the chancellor’s “first pre-Budget speech for 50 years – hinting at huge tax rises”.
“Reeves puts Britain on notice,” says the Independent. The paper reports that a think tank has warned that a 2p income tax rise might not be enough to fix the country’s finances. A smiling Sir David Beckham holding his knighthood medal also fills the front page as the paper declares: “Arise Sir Becks!”
“Finally… Sir Goldenbawls” follows the Sun, as it reports that Sir David Beckham admitted he was “crying for months” after learning of his long-awaited knighthood. “It’s been been a very emotional day,” he said after the ceremony at Windsor.
The Guardian’s front page spotlight’s Sir David calling his knighthood “my proudest moment”. Also prominent, the paper reports on Health Secretary Wes Streeting’s warning that NHS staff are bearing the brunt of “ugly” racism. In an interview with the paper, Streeting says incidents of verbal and physical abuse based on people’s skin colour are happening so often that it has become “socially acceptable to be racist”.
The Telegraph says that pressure is mounting on the BBC’s senior executives after a leaked dossier revealed “serious and systemic” editorial bias. The paper says Conservative leader Kemi Badenoch has called for “heads to roll” over the allegations. A BBC spokesperson said: “While we don’t comment on leaked documents, when the BBC receives feedback it takes it seriously and considers it carefully.”
Finally, the Metro celebrates the story of the LNER rail staff worker who has been praised as a “hero” for saving passengers’ lives during the Cambridgeshire train attack. The paper quotes Samir Zitouni’s family who say: “He’s always been a hero.”
Chancellor Rachel Reeves features on many of the front pages after she warned voters about the “necessary” choices to be made at this month’s Budget to balance the books.
The i Paper highlights that such a hike would be the first since 1975, and break what the paper calls a “50-year taboo” against the policy.
The Daily Mail labels the chancellor’s Downing Street speech on Tuesday as “all bluster” and a “waffle bomb”.
According to the Daily Telegraph, some within Labour have been left fearing the worst. An unnamed Labour MP tells the paper they believe putting up taxes will “scotch whatever limited chances” the party has of being re-elected, and that breaking the manifesto pledge could leave them with “no credibility”.
The Times says ministers have raised concerns that an increase in income tax could see them lose some voters “forever”.
The front page of the Metro has a photograph of the rail worker, Samir Zitouni, who protected passengers during the knife attack on a train in Cambridgeshire on Saturday. More details were released about him yesterday. The paper quotes his family who say “he’s always been a hero”.
The Daily Telegraph reports that Sir Keir Starmer’s deal to hand over sovereignty of the Chagos Islands to Mauritius has been delayed. The paper says it is because a Conservative peer submitted an amendment to the legislation, to try to make the government consult the Chagossians before going ahead.
A Foreign Office spokesman said there had been a lack of notice given regarding the amendment, and a Lords vote to confirm the Bill would be moved to a later date.
And most of the papers feature photographs of Sir David Beckham receiving his knighthood at Windsor Castle yesterday. “Bend a knee like Beckham” says the Daily Mirror while the Daily Mail goes for: “Arise Sir Becks.”
British Chancellor of the Exchequer Rachel Reeves delivers a rare pre-budget speech Tuesday at her official residence at No. 9 Downing Street, London, in which she suggested tax hikes were unavoidable. Photo by Andy Rain/Pool/EPA
Nov. 4 (UPI) — British Chancellor Rachel Reeves signaled Tuesday that she was likely to raise taxes on ordinary people in her upcoming budget this month in spite of an election pledge by the Labour government it would not do so.
In a speech in Downing Street, Reeves said she would make “the choices necessary” to ensure the foundation of the economy was sufficiently strong for the government to deliver on its mandate to protect the NHS, get down the national debt and rebuild the economy.
Notably, she did not repeat the manifesto pledge the party ran on in the 2024 general election, in which it swept to power to leave untouched the three main taxes — income tax, National Insurance and VAT.
Instead, seeking to explain her actions in advance of her watershed budget, which she will deliver to Parliament on Nov. 26, she said people needed to “understand the circumstances we are facing” and that everyone needed to do their bit to rectify the situation.
“As I take my decisions on both tax and spend I will do what is necessary to protect families from high inflation and interest rates, to protect our public services from a return to austerity and to ensure that the economy that we hand down to future generations is secure, with debt under control.
“If we are to build the future of Britain together, we will all have to contribute to that effort. Each of us must do our bit for the security of our country and the brightness of its future.”
Reeves dangled the prospect of rewards down the line, stating that getting it right now would yield more resilient public finances with the headroom to withstand global shocks, which in turn would provide businesses with the confidence to invest.
She said that would in turn leave the government with more leeway to act when necessary, investing in infrastructure and industry to build a stronger economy and get down the cost of government debt, spending less on interest and more and schools and the NHS.
Reeves is betting on the budget, her second, to win the endorsement of the market for her management of the country’s finances by showing she can stick to the fiscal rules she set for herself in October 2024.
Those rules state she must balance spending with revenue — within a plus or minus margin of 0.5% of GDP — within five years, meaning no borrowing for everyday spending from the 2029-30 financial year onward. In addition, the ratio of government debt to GDP must begin falling within the same timeframe.
To do that, however, she must demonstrate how she plans to plug a fiscal hole of as much as $40 billion and boost lackluster economic growth.
The only options to close the gap and balance the books are a return to austerity — which the government has categorically ruled out — or boost the amount of money flowing into government coffers.
Reeves raised some taxes on business in her first budget in November 2024 and to come back for more after promising she would not do so, particulary when it comes to raising the basic rate of income tax — currently 20% — is very high risk, politically.
It hasn’t been done for 50 years and it didn’t work out well for then-Labour government with the country plunged into a currency crisis and forced to seek a bailout loan from the IMF.
Reeves mostly laid blame at the feet of the previous Conservative administration’s policies, including Brexit, austerity and cuts to infrastructure spending, all of which she said had led to falling productivity.
She also cited high inflation globally and economic uncertainty created by the trade tariffs imposed by U.S. President Donald Trump in recent months.
Conservative shadow chancellor, Mel Stride, said it was now certain tax hikes for families and businesses were on the way.
He said that if Reeves proceeded to go back on her word, she should quit.
Daisy Cooper, Treasury spokesperson for the Liberal Democrats, said the government could no longer dodge responsibility.
“It’s clear that this budget will be a bitter pill to swallow as the government seems to have run out of excuses,” she said.
