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Chancellor Rachel Reeves has called for unity and support from Labour MPs ahead of the Budget, which it is thought will most likely contain tax hikes. ITV News Political Correspondent Carl Dinnen and ITV News Political Editor Robert Peston report
The Chancellor has urged Labour MPs to support Wednesday’s Budget, which is widely expected to see tax hikes introduced.
Rachel Reeves called for unity from her party as she spoke in front of restive backbenchers ahead of the Budget, and insisted she was proud of her forthcoming statement.
She has long suggested she will have to hike taxes to fill a black hole in the public finances, and is now facing the prospect of a downgrade in the Budget watchdog’s economic growth forecast for every year of this Parliament.
Labour backbenches are said to have become increasingly frustrated about the planned tax hikes, which come as the party’s opinion poll ratings have dropped significantly.
Speaking before the Parliamentary Labour Party (PLP) on Monday night, Reeves could be heard telling backbenchers politics is a “team sport” as she called for their support.
Reeves could also be heard suggesting that the Budget was a package, not a “pick ‘n’ mix” where MPs could say they liked the “cola bottles” but disliked the “fruit salad”.
She insisted it was a Labour Budget, a progressive Budget and that she was proud of it.
The Budget will focus on three priorities, Reeves also told MPs: “Cutting the cost of living, cutting NHS waiting lists and cutting the cost of debt.”
Rachel Reeves will deliver her Budget on Wednesday. Credit: PA
Reeves ended her speech to Labour MPs by saying: “On Wednesday, this will be a fair Budget. It will be a Budget that delivers strong foundations, secures our future and delivers on our promise of change.”
She at one point appeared to suggest there would be surprises at the Budget, when she urged MPs to stay to the end of her statement to the Commons.
But a Treasury spokesman later denied this and said the era of “rabbits out of a hat” is “over”.
Asked why Reeves felt the need to remind MPs that politics is a team sport, the spokesman told reporters: “Because united parties are the ones who win elections.”
This comes as the chancellor had earlier been warned not to inflict “death by a thousand taxes” on British business in Wednesday’s Budget.
CBI’s Rain Newton-Smith warned the chancellor not to inflict “death by a thousand taxes” on British business in the upcoming Budget. Credit: PA
The head of the Confederation of British Industry (CBI), Rain Newton-Smith, said the government must “change course” and avoid heaping more costs on firms.
She urged Reeves to stand up to Labour’s backbenchers to take tough decisions on issues such as cutting welfare spending, as she spoke at the CBI’s conference on Monday.
“Prove it – against opposition, against short-term politics, be it on welfare, be it pension increases, show the markets you mean business,” Newton-Smith said.
When asked about the CBI’s concerns, Business Secretary Peter Kyle told ITV News he is “listening very closely to what the CBI has been saying today”.
He added that they have “put challenges” his way, and that he “will rise to those challenges”.
Business Secretary Peter Kyle promised measures to slash red tape for firms in the hope of boosting economic growth. Credit: PA
Asked whether there’s been too much speculation ahead of Wednesday’s Budget, Kyle said: “Every budget I’ve ever known has been blighted by speculation.
“I remember the George Osborne ones – the George Osborne ones were really quite sort of public debates leading up to them.
He added: “Now, business has said to me that they’ve raised this as an issue.
“I’m not here to ignore business, I’m here to listen to business.”
The scale of the task facing the chancellor was underscored by a Sky News report that the Office for Budget Responsibility has downgraded its forecast for 2026 and for every subsequent year before the next election, due in 2029.
The 46-year-old has already acknowledged publicly that growth forecasts will be hit due to the OBR’s revision of its assumptions about productivity.
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The downgrade and the following reduction in tax revenues will force the chancellor to hike taxes to balance the books and build a bigger buffer against future shocks than the historically low level of headroom she has previously given herself.
In her search for extra taxes, Reeves is considering a levy on high-value homes worth more than £2 million, which could raise £400–£450 million, according to The Times.
More than 100,000 properties could be affected, with 2.4 million homes in the top three council tax bands set to be revalued to determine which would face the surcharge.
The chancellor is also widely expected to extend the freeze on income tax thresholds, potentially dragging around 1.75 million people into paying higher taxes.
Conservative Party leader Kemi Badenoch is expected to step up her attacks against Labour ahead of the Budget. Credit: Jacob King/ PA
Conservative leader Kemi Badenoch told ITV News tax rises would be a “disaster”.
She said: “We need to start by cutting spending, that is where the real problem is.
“Tax rises, after promising not to raise taxes, I think would be a disaster,” Badenoch continued.
“We saw tax rises last year; all they did was crush business.
“And I think the worst thing is tax rises to pay for welfare. That’s what we’re really seeing.
“What we need to do is bring our welfare bill down to much more manageable levels.
Watch the Chancellor’s Budget from 12.15pm on Wednesday live on ITV1, ITVX and our YouTube channel.
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