Rachel Reeves has defended her decision to raise taxes at this week’s Budget, insisting her plan provided the stability needed to secure growth.
In a series of media interviews on Sunday, the Chancellor argued that her plans for economic reform would bring more growth than independent economists were forecasting.
Ms Reeves has faced stiff criticism for her decisions to raise employers’ national insurance contributions and increase capital gains tax and inheritance tax in an effort to pay for higher investment in schools and the NHS.
But speaking to the Sunday Times, the Chancellor said she had delivered on a manifesto promise to restore economic stability and was now making growth her “number one priority”.
Now we have fixed the foundations of our economy, I am going for growth
She said: “I set out a robust set of fiscal rules within a framework which means we will not borrow for day-to-day spending and we will get debt down as a share of the economy.
“Now we have fixed the foundations of our economy, I am going for growth.
“Because we cannot tax and spend our way to prosperity, nor can we tax and spend our way to better public services. Instead, we need economic growth and we need economic reform.”
Ms Reeves is expected to set out a series of reforms to pensions, welfare and industrial strategy in the coming weeks.
Combined with reforms to the planning system to speed up building projects, Labour hopes the changes will be enough to significantly boost investment, productivity and economic growth.
Fixing the NHS, rebuilding Britain and protecting working people from higher taxes in their payslips.
— Rachel Reeves (@RachelReevesMP) November 2, 2024
We promised change - we are delivering change. pic.twitter.com/J8nXi1PQED
Without higher growth, economists have suggested that the Government will need to find another £9 billion after next year in order to avoid cuts to unprotected departments.
Speaking to broadcasters, Ms Reeves repeated her claim that she would not need to raise taxes again following Wednesday’s Budget.
She said: “We have now set a public spending trajectory for the rest of this Parliament. We don’t need to raise more money in tax, so businesses and investors should have confidence that our public finances are now on a sound footing.”
Ms Reeves also challenged the new Conservative leader Kemi Badenoch to say which investments she would oppose if she objected to the Budget.
The Chancellor told the Observer: “If Kemi Badenoch opposes this Budget, then she has to tell the country if she opposes investment to cut waiting lists, investment to recruit teachers and investment to build critical infrastructure.
“Labour has made its choices, now the Tories need to make theirs.”
