Rachel Reeves Pledges No Tax Increases for Workers Amid Budget Challenges

Rachel Reeves, the Chancellor of the Exchequer, has assured the public that average workers will not face increased taxes, while firmly stating that she will not repeat the extensive tax-raising measures of the last Budget. This commitment comes as she confronts significant challenges in balancing the government’s spending plans, particularly following her reversal on cuts to winter fuel and disability benefits, which eliminated a substantial portion of her £10 billion fiscal buffer.

Rumours are increasing that Reeves may need to consider tax hikes to address the financial shortfall. In light of this, senior figures within the Labour Party, including former leader Neil Kinnock, have proposed the introduction of a wealth tax aimed at the wealthiest individuals. While Reeves has not dismissed this idea entirely, she emphasized her commitment to her manifesto promise aimed at protecting the earnings of working individuals.

In an interview with the Mirror, she said, “You can see what we mean by the manifesto commitments we made, and we said, no increases in income tax, national insurance or VAT on working people, and we stuck to that in the Budget last year.” She highlighted that the previous year’s budget raised £40 billion in taxes, primarily from the wealthiest and businesses, to address the financial issues inherited from the Conservative government. This approach also allowed for an additional £29 billion funding for the National Health Service (NHS) without imposing new taxes on working families.

Reeves reiterated, “We made a commitment in our manifesto to not increase those taxes. We didn’t last year. It remains our commitment for this Parliament.” She conveyed her unwillingness to propose another budget of such scale, confirming, “Yes. Last year, I had to deal with the inheritance that I faced, which included a £22 billion black hole in the public finances.” The Chancellor pointed out that the funds allocated in the previous budget were crucial for stabilizing public services, particularly the NHS, after years of neglect.

The Chancellor’s remarks come at a time of heightened global uncertainty, including ongoing conflicts in the Middle East and trade disruptions in Europe. Nevertheless, she expressed confidence in the resilience of the UK economy, stating, “We’re a strong economy. We can weather those storms.”

Investment in Child Welfare Initiatives

On March 15, 2024, Reeves visited Westleigh Methodist Primary School in Leigh, where she announced the establishment of a £500 million Better Futures Fund. This initiative aims to support programs for vulnerable children, coinciding with increasing pressure on the government from its own backbenchers to address child poverty more aggressively. The Conservative Party’s controversial two-child benefit limit is expected to become a focal point of debate, with an estimated cost of £3.5 billion to abolish the policy.

When asked whether eliminating this restriction was still on the table following recent reversals on disability cuts, Reeves stated, “I’m not wedded to any particular policy. I absolutely share the desire to lift kids out of poverty.” She emphasized her commitment to this cause, which is echoed by many members of Keir Starmer’s Cabinet who have personal experiences with challenging backgrounds.

During her visit, Reeves described the Better Futures Fund as a “down payment” to assist children in need. She noted that recent expansions of free school meals are part of a broader effort to reduce child poverty. “Reducing child poverty is about putting more money in the pockets of families. This is about expanding the opportunities, the horizons, the ambitions of young people,” she stated.

Reeves highlighted the importance of ensuring children arrive at school ready to learn, recounting experiences with children who lack basic preparation for school. “We know there’s loads of children who turn up at school when they’re four or five for reception and they’re not ready for school,” she explained. This lack of readiness includes issues such as not being potty trained or unable to recognize letters and numbers.

She concluded by expressing her motivation for entering politics, stating, “I got involved in politics in the first place because I wanted more children from ordinary backgrounds and from some of the poorer backgrounds as well, to get a good start in life. Where you start shouldn’t be your destiny.”

As the government navigates these pressing issues, Reeves’ commitments reflect both a response to immediate challenges and a broader vision for the future of children and families in the UK.