Chancellor Rachel Reeves has urged Labor MPs to get behind her “fair and progressive” budget, warning that while not every measure would be universally popular, the package needs to be fully supported to deliver the government’s economic agenda.
At a tense meeting of the Labor parliamentary party after two weeks of leadership speculation, Reeves told MPs that “politics is a team sport” and insisted the budget would contain measures they could confidently sell to voters.
“If you look at the distribution analysis, you will see that it is a working budget, a progressive budget, a budget that I am proud of,” she said. But she warned MPs that the measures need to be taken “as a package and not as a pick and mix”, telling them: “You may like 95% of it and 5% not, but we need to deliver this together.”
Reeves assured MPs that tax rises would be “kept to a minimum”, with the Budget’s focus on reducing the cost of living, reducing NHS waiting lists and reducing the cost of the national debt. She argued that reducing borrowing costs was crucial to freeing up money for public services.
The Chancellor stressed she was “determined to keep people’s contributions as low as possible”, adding that supporting household budgets would also have an impact on consumer spending and boost economic activity.
Reeves is expected to confirm on Wednesday that Britain’s economic growth forecasts have been downgraded for each of the next five years, despite Labor making economic growth its central mission at the last election.
She defended Labour’s record since taking office, highlighting the increase in the national living wage, protecting the triple lock, expanding free childcare, free breakfast clubs in primary schools and extending free school meals to a further half a million children. The recent freezes on prescription fees and rail fares were also seen as evidence of initial progress.
“But I know there is more work to be done,” she told MPs. “On Wednesday, this will be a fair budget…one that builds strong foundations, secures our future and delivers on our promise of change.”
Reeves also tried to quell rumors about her political future by promising to stay in office and thanking her colleagues for their support amid what she described as misogynistic media attacks. “I’ll show it to the media, I’ll show it to the Tories – I won’t let them beat me,” she cheered.
The Chancellor wants to create up to £20 billion of fiscal space to comply with her self-imposed rules. Popular measures expected include the removal of the two-child benefit cap and measures to reduce energy costs.
After ruling out an income tax increase, Reeves is expected to instead rely on a series of smaller tax measures – including a possible levy on high property values, freezing income tax thresholds for two more years, a per-mile fee on electric vehicles and stricter rules on salary sacrifice schemes.
She also criticized the media’s handling of budget speculation, saying the rumor-driven coverage had been “incredibly destabilizing.”
Reeves said the Office for Budget Responsibility report, to be published alongside the Budget, would confirm that the UK’s fall in productivity was due to Brexit and Conservative-era austerity, rather than the policies of the current government.
