A Treasury minister has refused to rule out tax rises at the budget in the autumn, amid concerns that any global economic instability could mean the government will not have enough money to fund its spending plans.
Speaking to Sky’s Politics Hub With Ali Fortescue, Emma Reynolds defended how the economy was being handled, but would not say if more revenue might be needed from taxation.
Asked repeatedly if she was ruling out tax rises, the minister said: “I’m not ruling it in and I’m not ruling it out.
“We have got £9bn of fiscal headroom [money left in the budget], which is significantly more than the Tories had when they were in power, at the end of their time in power.
“We’ve got a growing economy, and we, as the chancellor did say in the [Commons] chamber, the budget in the autumn last year was a once-in-a-generation budget where we had to do some very tough things, and we’re not going to have another budget like that in the future.”
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Responding directly to the minister’s interview, shadow chancellor Sir Mel Stride told Sky News: “The mask has slipped. Today’s spending review was nothing more than an obfuscation.
“Now we know – tax rises are coming.”
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Fiscal rules are non-negotiable
Speaking to Sky’s political editor Beth Rigby, the chancellor Rachel Reeves avoided the direct question about potential tax rises, saying: “Before any money goes out the door, we will have a budget in the autumn, and we will show in the round, when the Office for Budget Responsibility update their forecast, how everything is consistent with the fiscal rules that I set out as chancellor last autumn.”
She added that they “made the tax changes that were necessary last year to fund the spending that I’ve set out today”.
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Ms Reeves has imposed a set of “iron-clad” fiscal rules, which restrict government borrowing in order to ensure economic stability and reduce the UK’s national debt, Labour says.
These rules mean the amount of money she has available to spend on the day-to-day running of public services is limited to only what the government takes in tax revenue.
‘A miniscule margin’
But as Paul Johnson from the non-partisan Institute for Fiscal Studies told our presenter Jayne Secker, the chancellor has left herself very little room for manoeuvre.
He said: “She set the fiscal rules and she’s also meeting them by the most miniscule margin imaginable.
“What does that mean? That means if there’s any negative news on the economic forecasts and the other forecasts, then she will have to raise taxes in order to meet those rules. And, of course, we have had some negative news over the last few months.”
