Rachel Reeves has attempted to distance herself from previous promises not to raise taxes as she defended her bombshell budget.
The Chancellor has clobbered the nation with a record £40 billion tax hike in a massive blow to pensioners, businesses and farmers.
The tax sledgehammer came despite assurances made before the general election that Labour wouldn’t put them up.
Ms Reeves said she was “wrong” to make the promise as she blamed the previous government for hiding a “black hole” in the country’s finances.
Referring to comments she had made during the election campaign, Ms Reeves told Sky News’s Sunday Morning With Trevor Philips: “I was wrong on June 11, I didn’t know everything.
“Because when I arrived at the Treasury on July 5, just over a month after I said those words, I was taken into a room by the senior officials at the Treasury and they set out the huge black hole in the public finances, beyond which anybody knew about at the time of the general election because the previous government hid it from the country, they hid it from Parliament, and indeed they hid it from the independent official forecasters at the Office for Budget Responsibility.
Rachel Reeves (Image: Getty)
“So when I went into that Budget last week, I had to put our public finances back on a firm trajectory.”
The previous government’s national insurance cuts were “sold on a false premise”, the Chancellor has said.
Asked why she had supported the cuts at the time, Rachel Reeves told Sky News’s Sunday Morning With Trevor Philips: “They were sold on a false premise, the premise being that the money was available.
“The money clearly wasn’t available, that’s what the £22 billion black hole was.”
She added: “I supported those cuts to national insurance because they were costed and funded, but now what we find out after the election is that the numbers didn’t add up because the government hadn’t revealed to the Office for Budget Responsibility or Parliament the gap between the commitments they were making and the money they had coming in.”
Reforming council tax would have led to some people “paying significantly more”, Ms Reeves said as she was charged with “dodging” the issue.
Asked whether her Budget had “dodged” the question of whether to reform council tax by uprating property values, the Chancellor told Sky News’s Sunday Morning With Trevor Philips: “That’s a very complicated and tricky issue to address and it would result in some people paying significantly more in tax.”
Asked what happened to making “tough choices”, she added: “I think we made plenty of tough choices in the Budget this week.”
said the Government would “absolutely” keep to Labour’s election promise of not raising key taxes on “working people” through the current Parliament.
Ms Reeves said: “Yes, absolutely. It was our manifesto commitment not to increase those three taxes, so income tax, employee national insurance and VAT and we won’t increase those.”
Addressing concerns over the impact on GPs, care homes and hospices of increasing employer national insurance contributions, she said: “What the tax increases on Wednesday paid for in part was a £22.6 billion investment into the National Health Service and the National Health Service will now make the allocations to GPs, for example.”
Ms Reeves added: “There’s enough money now in the NHS budget to fund those priorities.”
Ms Reeves went on: “Care homes got in the Budget on Wednesday a £600 million settlement, local government got a 3.2% increase, so above inflation, a real terms increase in spending this week, so I’m confident that those services will carry on running properly.”
The Chancellor added: “It’s an absolute commitment.”
Ms Reeves said the Government has “wiped the slate clean” on the “mismanagement and the chaos” of the previous Tory administration, adding: “It’s now on us.
“We’ve put everything out into the open, we’ve set the spending envelope of this Parliament, we don’t need to come back for more, we’ve done that now, we’ve wiped the slate clean.”
Pressed on whether she will return with more tax rises, Ms Reeves replied: “I’m not going to be able to write five years worth of budgets on this show today, but … there’s no need to come back with another Budget like this, we’ll never need to do that again.
“We’ve now set the spending envelope for the remainder of this Parliament, we don’t need to increase taxes further. We need to do two things now: we need to reform our public services to make sure they work better and we need to grow our economy.”
