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Chancellor Rachel Reeves has defended her tax-hiking Budget today, saying that without the changes to national insurance, the government would have lost control of the economy.
Speaking on Time Radio this morning, Reeves said she recognises there are “consequences to increasing National Insurance,” but the “consequences of irresponsibility would have been far greater” had the government not acted to address what it claimed to be a £22bn black hole left by the conservatives.
She added that without the tax hikes: “We would have seen what happened again when Liz Truss crashed the economy because we would have seen again increases in borrowing costs, in mortgage rates because if you lose control of the public finances that is what happened.”
The Chancellor continued: “The problem is the alternative was losing control of the economy and being on this programme and you asking me about increases in borrowing costs, markets losing confidence in the UK economy, we’ve now returned stability to the public finances and that is better than the alternative which is losing control in the same way that the Conservatives did.
“I’m not denying that there are consequences but we had to take that action to return stability to the economy and now we have that platform of stability, we can make the changes, the reforms and the investment to get on and grow our economy.”
Rachel Reeves backs growth
The comments come as part of what can be described as a public relations blitz from the Chancellor.
In a major speech on Wednesday, Rachel Reeves tried to draw a line under what have been a turbulent few months for the Labour government since it swept to power last summer.
She vowed to fight for economic growth and has unveiled a suite of policies the Treasury said would “kickstart” economic growth, including an “action plan” intended to instil a pro-growth approach to regulation, alongside plans to resume trade talks with India and the redevelopment of Old Trafford.
Ahead of the speech, in a Times newspaper opinion piece, Prime Minister Sir Keir Starmer compared Labour to Margret Thatcher’s government.
“In the 1980s, the Thatcher government deregulated finance capital. In the New Labour era, globalisation increased the opportunities for trade. This is our equivalent,” he insisted.
During a Q&A with journalists following the speech, Reeves refused to rule out tweaks to her fiscal programme and further tax rises for businesses.
She said: “I am not going to write five years’ worth of budgets in the first six months of office, but that was a once-in-a-generation Budget to fix the inheritance and to draw a line under the economic and fiscal mismanagement of the Conservatives.”
The Chancellor also said she has no plans to publish her tax return, as she joked about the government using HMT revenue “wisely to invest in infrastructure and grow our economy”.
