Rachel Reeves will unveil her historic Budget – the first by a Labour chancellor in 14 years – with a message of hope for the UK as she pledges to deliver economic growth and put money back in people’s pockets with a rise in the national minimum wage.
In what is expected to be a Budget of record-breaking tax rises involving “tough choices” to “fix public services”, Ms Reeves will hold out some hope with a rallying cry that she intends to “invest, invest, invest” to turn the country around.
The rhetoric appears to deliberately echo Tony Blair’s three priorities of “education, education, education” ahead of the 1997 election as Ms Reeves attempts to grasp the optimism of his New Labour government in what is widely expected to be a gloomy Budget.
The first female chancellor in the position’s 803-year history will tell the country her “belief in Britain burns brighter than ever” and while she will be making some difficult decisions “the prize on offer to today is immense”.
However, her Budget comes amid growing warnings of the impact of some of the measures which have already been revealed:
Offering some hope, Ms Reeves will promise the decisions in her Budget on Wednesday will lead to “more pounds in people’s pockets. An NHS that is there when you need it. An economy that is growing, creating wealth and opportunity for all. Because that is the only way to improve living standards.”
The chancellor will also lean on the wartime spirit of 1945 when Clement Attlee led Labour into government and “rebuilt our country out of the rubble of the Second World War”.
She will add: “In 1964, it was the Labour Party that rebuilt Britain with the white heat of technology. And in 1997, it was the Labour Party that rebuilt our schools and hospitals.
“Today, it falls to this Labour Party, this Labour government, to rebuild Britain once again.”
Ms Reeves will make clear that fixing the NHS is a priority.
But her Budget is already widely expected to have to close a £40bn gap in Labour’s spending plans with rises in capital gains tax, and employers’ national insurance contributions.
There is also an expectation that inheritance tax will go up, hitting the middle classes as well as the already confirmed VAT on independent school fees.
Ms Reeves is expected to push ahead with abolishing non-dom status, even though some Treasury analysis reportedly suggests it might lose the Exchequer money.
But the chancellor told her cabinet colleagues on Tuesday that the blame lies with the Tory inheritance and a black hole of £22bn left in spending plans even before her Budget.
In her speech, she is expected to repeat the accusation and also remind people of Liz Truss’s disastrous tax-cutting mini-Budget in 2022 which caused turmoil in the markets and saw interest rates spike.
But Ms Reeves will emphasise that her priority is to deliver economic growth despite warnings her tax rises could suppress it.
She will say: “The only way to drive economic growth is to invest, invest, invest. There are no shortcuts. To deliver that investment we must restore economic stability.”
She will make clear that this Budget rejects austerity, instead prioritising economic stability, investment and reform. She will say it will ensure funding to cut hospital waiting lists, unlock affordable homes and add new investment to rebuild schools.
“Working people won’t face higher taxes” on their payslips in line with the manifesto commitment not to increase taxes on income tax, VAT or employee national insurance, the chancellor will say.
However, critics have already questioned Labour’s honesty ahead of the Budget. The Tories have accused Ms Reeves of “making up” the £22bn black hole, pointing out she found similar levels of money to pay for bumper public sector pay rises.
Outgoing Institute for Fiscal Studies (IFS) director Paul Johnson pointed out that during the election, he warned of “a conspiracy of silence” by the main parties about the state of public finances, so Ms Reeves should not have been surprised by what she found.
Added to that, the government has been dogged by questions over what is meant by “working people”.
