Rachel Reeves admits she was ‘wrong’ about this one thing during the election

Rachel Reeves has revealed she was ‘wrong’ to tell voters during the election that no big tax hikes would be needed.

It comes just days after the Chancellor announced her first Budget on Wednesday filled with measures welcomed by some and criticised by others, including a boost to minimum wage workers and a National Insurance hike.

The government faced a £22,000,000,000 spending black hole – including on schools and the NHS – ahead of the Budget inherited from the Conservative government, Reeves claimed previously.

The Conservatives labelled the figure as ‘fiction.’

But just some months ago on the election campaign trail on June 11, Reeves said she would not need to raise taxes beyond what was already set out in the Labour manifesto.

Reeves explained that the change was because she didn’t previously ‘know everything’ about the state of the public finances.

She told Sky News’s Sunday Morning with Trevor Phillips: ‘I arrived at the Treasury on July 5, just over a month after I said those words. I was taken into a room by the senior officials at the Treasury and they set out the huge black hole in the public finances, beyond which anybody knew about at the time of the general election.’

At the heart of the tax U-turn is a row over the size of a financial black hole.

Metro’s consumer champion breaks down what the Budget means for you

The Office for Budget Responsibility appears to have vindicated Reeves after it revealed that its forecast in the spring and summer could have looked different had it received all funding plans from the previous Conservative government led by Rishi Sunak.

The independent watchdog revealed that the previous government had failed to give it around £9,000,000,000 of additional spending pressures ahead of the last Budget in March, adding that is position may have changed between March and July based on this information.

Before the Budget – the first ever delivered by a female Chancellor – Reeves assured that her measures would not tax ‘working people.’

She told the broadcaster: ‘It’s now on us.

‘We’ve put everything out into the open, we’ve set the spending envelope of this Parliament, we don’t need to come back for more, we’ve done that now, we’ve wiped the slate clean.’

She vowed that there would be ‘no need’ to bring another Budget ‘like this’ when asked about potential further tax rises.

Reeves continued: ‘I’m not going to be able to write five years worth of budgets on this show today, but there’s no need to come back with another Budget like this, we’ll never need to do that again.’

Economists have raised the alarm that the current spending plans could mean the Chancellor will have to find £9,000,000,000 extra after next year to protect unprotected departments from cuts.

The Chancellor will count on economic growth to help avoid further tax hikes.

However, both the fiscal watchdog and experts have warned that growth is likely to remain low over the next five years.

The Chancellor faced backlash over her changes to the inheritance tax, including on farms, after axing inheritance tax relief, and the 1.2% national insurance increase on employers.

Others emerged from the Budget as winners, including carers, workers on minimum wage and drivers.

Carers will be allowed to earn more without losing their allowance and full-time workers on minimum wage will see an extra £1,400 a year.

Pubgoers also got good news after the cost of a pint will go down by a penny.

Kemi Badenoch, the new leader of the Conservative Party, told the BBC’s Sunday with Laura Kuessnerg she would reverse Labour’s decision to impose a 20% VAT on private schools from January.

She claimed the plan was ‘a tax aspiration, but it won’t raise any money.’

Conservative shadow culture secretary Julia Lopez said: ‘Last week the Chancellor delivered a Budget which broke Labour’s promises. It was dishonest and, as Labour have admitted, it will make people poorer.

‘Labour’s political choices to impose a tax on working people, local GP services, care homes and introduce a family farm tax were nowhere to be seen in their manifesto. That is because Starmer and Reeves did not have courage to be honest with people during the election.

‘We are clear these are Labour’s choices and Labour’s choices alone.’

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