Rachel Reeves lays the ground for tax rises as Chancellor admits ‘necessary choices’ are coming in Budget: Live updates

Millions of people have been put on notice that their taxes will go up next month after Rachel Reeves’ pre-Budget speech today in Downing Street.

The Chancellor blamed her misfortunes on previous Government as she faces breaking Labour’s manifesto not to increase VAT, income tax or National Insurance.

Here’s the key takeaways from her speech:

• Rachel Reeves paved the way for widespread tax rises as she warned we will all have to contribute’ to getting Britain’s flagging economy back on track.
• The Chancellor stressed international headwinds and rising costs of servicing the debt mountain as the challenges facing the public finances.
• But she squarely blamed Brexit and Tory austerity, suggesting ‘longer-term factors’ meant the economy ‘is not working as it should’.
• In a blatant softening up exercise ahead of her announcements on November 26, Ms Reeves said there is a ‘clear choice’ between ‘investment and hope, or cuts and division’.
• Ms Reeves repeatedly dodged invitations to repeat Labour’s election vow not to increase income tax, national insurance or VAT.
• She said she would do ‘what is right’ rather than ‘popular’ and prioritise ‘protecting our NHS, reducing our national debt, and improving the cost of living’.
• Standing in front of a podium with the slogan ‘strong foundations, secure future’, Ms Reeves said there were no ‘easy answers’.
• The Chancellor warned markets could be even more negative about lending to the UK if they did not believe her commitment to meeting her fiscal rules.

Britain’s long-term borrowing costs have edged lower after Chancellor Rachel Reeves reiterated an ‘ironclad’ commitment to her fiscal rules, but the pound came under further pressure as she set the stage for an income tax hike.

Yields on UK government bonds, also known as gilts, fell as much as six basis points to 4.38%, while the 30-year yield dropped to its lowest level since April at 5.15% at one stage.

Gilt yields move counter to the value of the bonds, meaning their prices fall when yields rise.

But gilts soon trimmed their rally as questions continued to swirl over the upcoming November 26 Budget, with Ms Reeves’s refusing to give any firm details on what can be expected.

The yield on 10-year gilts stood just one basis point lower following the Chancellor’s unusual pre-Budget address, while on the London market, the FTSE 100 Index also dropped nearly 100 points lower.

Ms Reeves said financial markets ‘know my commitments to the fiscal rules is ironclad’.

Conservative leader Kemi Badenoch described Rachel Reeves’ Downing Street address as ‘one long waffle bomb’ as she accused Labour of seeking to blame everyone else for the country’s economic struggles.

Speaking in London, Ms Badenoch urged the Chancellor to ‘copy and paste’ her party’s policies and insisted the Conservatives were the only party with a plan for fiscal responsibility

Here are the key takeaways from her response:

• Ms Badenoch said the Chancellor delivered a ‘masterclass in managed decline’ that will confuse business leaders and investors
• She said Labour had given up on trying to ‘live within its means’ and that Britain has ‘stopped working’ because it no longer made sense to go to work
• She also accused the Government of being ‘hypocritical’ as it tells people to tighten their belts
• The Conservative leader said it was ‘crazy’ to blame the Tories for unemployment figures and ‘utterly ridiculous’ to see her ‘stand there blaming everybody except herself’

Kemi Badenoch accused the Labour Government of having given up on trying to ‘live within its means’.

They talk about working people while making life harder and harder for people who actually work, and worst of all, they pretend that what they’re doing is all necessary.

They pretend that they don’t have a choice. The reality is that they have given up trying to change anything.

They have given up trying to get the Government to live within its means, and they have given up on not raising tax.

That’s what Rachel Reeves was telling us this morning, and a Government that refuses to live within its means, while telling everyone else to tighten their belts isn’t being fair, that Government is being hypocritical.

Getting the Government to live within its means is not austerity, it is respect. It is respect for taxpayers.

Badenoch has promised that if the Conservatives return to power they will abolish stamp duty and business rates.

She added: ‘We are going to make life easier for all of those people’.

Kemi Badenoch has said that Labour is ‘making everyone poorer’ during her address to people about her plans for the economy.

Everyone in Britain says they want to live in a fair society. What does that actually mean?

Labour talk about fairness in the language of Robin Hood. They think those who have have taken from those who don’t have.

They talk about those with the broadest shoulders, never worrying about the limit of what those shoulders can bear. They talk about fairness for working people, but they can’t define what a working person is.

The Tory leader told a press conference:

Each young person not in employment, in education or training, is costing the economy nearly £200,000. There are now a million of them… a million young people not in education, not in training, not working.

Labour might have given up, but we haven’t. We will get them working, and we’ll give them a £5000 first jobs bonus.

Kemi Badenoch claims that this is a huge problem facing the country and it is ‘not just an economic scandal but a moral one’.

She added: ‘In a year under Labour, 5000 new people each day are signing off work.’

• Reduce eligibility for lower level mental health issues
• People coming to this country don’t qualify for benefits
• Limit motability vehicles for people with serious disabilities

Kemi Badenoch said Rachel Reeves had delivered ‘a masterclass in managed decline’ that left business leaders and investors ‘confused’ because ‘Labour doesn’t have a plan to get Britain working’.

Mrs Badenoch said graduate jobs are down by a third since Labour took office.

The Chancellor’s speech was one long wafflebomb. A laundry list of excuses. She blamed absolutely everybody else for her own choices, her own decisions, her own failures.

She claims she will focus on the priorities of the British public. Whose priority is it to pay more tax? It is basic economics that if you tax something, you get less of it.

Reeves must do the exact opposite of what she has done so far.

The Tory leader is expected to give her reaction to Rachel Reeves’ pre-Budget speech indicating that tax rises are to come in the Budget.

by James Tapsfield, UK Political Editor

Rachel Reeves just spent an hour explaining to Brits why everyone else is to blame for impending tax rises.

But in fact that daft piece of theatre in Downing Street exposed one of the biggest reasons for her mounting woes: she is not very good at politics.

Who thought it was a good idea to tell Brits that they all face paying more tax in front of the most authoritarian backdrop possible?

Using a podium in the formal No9 briefing room, flanked two huge Union Jacks and with the Downing Street crest looming… Ms Reeves might as well have had a legion of Stormtroopers in front of her. ‘Everyone must contribute more to the Empire, snivelling wretches.’

A Chancellor with a defter touch would have chosen to do a fireside chat, reassuring the public that she understands the normal human experience.

Not propped up on a stage with waxy make-up and a meaningless soundbite.

Bizarrely, the government even published the text of her words afterwards under the heading: ‘Chancellors (sic) Scene Setter speech’.

It prompted one Labour wag to joke that they are looking forward to the PM giving a ‘Local Elections Expectations Management Address’ before the likely meltdown at the polls in May.

Just 16 months ago Ms Reeves was triumphantly parading into 11 Downing Street and billing herself as the ‘Iron Chancellor’.

Now she is the least popular frontline politician in the country, and the signs are that that she could be running out of road.

Keir Starmer’s patience with his long-time ally looks to be wearing thin, as evidenced by his pointed public rebuke when she initially misled him over her illegal letting row last week.

But the problems with the government’s bungling go much deeper – starting with the PM himself.

Conservative MP, Andrew Griffith, has joked ‘will the last Labour peer to flee the UK, turn the lights out’, after Reeves’ controversial pre-budget speech.

Writing on X the Shadow Secretary for Business and Trade suggested that her new budget is already forcing people to flee because she has created a ‘brain drain’.

When it was suggested during the questions put to the chancellor that she wants to do ‘what’s right and not what’s popular’ in her upcoming budget.

Well, I’d like to do both. But I will do what is right.

Asked if she was willing to lose the next election if it means that the public finances are secure again, she said:

We’ve got to do the right things.

There’s no reason why borrowing costs in Britain should be higher than every other G7 economy. Why are borrowing costs so higher than in Italy or in France?

The reason they are is because the damage done by that mini budget. It might have been three years ago, but we’re still paying the price of that.

Nigel Farage has taken to X following Rachel Reeves’ pre-budget speech to say the Chancellor is ‘not to be trusted’.

Despite Rachel Reeves saying the Budget would help ‘make decisions in the future easier than the decisions that confront us today’, the pound slipped following her speech.

Sterling slipped by 0.3pc against the dollar to $1.31, its weakest level since April. It was down by 0.4pc against the euro to €1.137.

The Chancellor’s suggestions of tax rises has sent borrowing costs lower, which typically also weakens the pound as investors think they can get better returns for their money elsewhere.

In a speech from Downing Street, Ms Reeves said:

The whole point of the decisions that I plan to make in the Budget on November 26 is to make decisions in the future easier than the decisions that confront us today.

By getting a grip of the national debt, for example, will open up opportunities either to put money into public services or to get taxes down in the future.

The reason those opportunities don’t present themselves now is that borrowing costs are too high and the national debt is too high.

Those are issues that we inherited from the previous government and they’re ones that I plan to address in the Budget later this month.

Taking questions from the media, Rachel Reeves has repeatedly swerved speculation her Budget will include tax rises for millions of British people.

In response to ITV’s Robert Peston who asks if ‘working people’ will be among those to see their taxes go up, Reeves avoids a direct answer.

Instead, she says today’s speech is not about choices but allowing people to understand the economic circumstances facing the country.

She insists there remains ‘great opportunities’ for Britain but also ‘big challenges’.

In a hint that tax increases are likely at the Budget, Rachel Reeves made clear that ‘we will all have to contribute’ to repairing the public finances.

As I take my decisions on both tax and spend, I will do what is necessary to protect families from high inflation and interest rates, to protect our public services from a return to austerity and to ensure that the economy that we hand down to future generations is secure with debt under control.

If we are to build the future of Britain together, we will all have to contribute to that effort.

Each of us must do our bit for the security of our country and the brightness of its future.

Politicians who continue to push for ‘easy answers’ are irresponsible, as she says she is looking to make serious ‘long term solutions’ and move away from ‘sticking plasters’.

Reeves says £1 in every £10 of taxpayers money is spent on debt interest.

She says the UK’s national debt now stands at £2.6tn – or 94% of the national income.

‘No accounting trick can change the basic fact’ that there are limits to how much the government can borrow, she adds.

Rachel Reeves has blamed the previous Conservative government’s ‘rushed and ill-conceived Brexit’ for Britain’s struggling economy.

Taking aim at the previous government, the Chancellor said austerity policies acted as a ‘hammer blow’ to the UK’s finances and ‘gutted’ the country’s public services.

The years that followed were characterised by instability and indecision.

She also adds the Conservatives were ‘underprepared’ for the Covid pandemic which further weakened the economy

Chancellor Rachel Reeves said the Budget would be focused on “getting inflation falling” and “creating the conditions for interest rate cuts”.

The choices I make in this Budget, this month, will be focused on getting inflation falling and creating the conditions for interest rate cuts to support economic growth and improve the cost of living.

The truth is that previous governments have not adequately faced up to these challenges.

Too often, political convenience has been prioritised over economic imperative.

The decision to pursue a policy of austerity after the financial crisis dealt a hammer blow to our economy, gutting our public services and severing the flows of investment that would have put our country on a path to recovery.

The years that followed were characterised by instability and indecision, with crucial capital investment continually sacrificed, and hard decisions put off again and again.

And then a rushed and ill-conceived Brexit that brought further disruption as businesses trying to trade were faced with extra costs and extra paperwork.

Chancellor Rachel Reeves talked up the need to ‘invest’ as she took the highly unusual step of teeing up her fiscal package with a speech in Downing Street .

She stressed international headwinds and rising costs of servicing the debt mountain – but squarely blamed Brexit and Tory austerity, suggesting ‘longer-term factors’ meant the economy ‘is not working as it should’.

In a clear softening up exercise ahead of her announcements on November 26, Ms Reeves said there is a ‘clear choice’ between ‘investment and hope, or cuts and division’.

She insisted she must deal with the world ‘as it is’ rather than how she ‘wishes it could be’.

The Shadow Chancellor of the Exchequer has said that if Reeves breaks her promise at the budget then ‘Starmer must sack her’.

Chancellor Rachel Reeves said despite the UK’s ‘considerable economic strengths’ it had been hit by a series of global challenges and persistent problems with productivity.

The continual threat of tariffs has dragged on global confidence, deterring business investment and dampening growth.

Inflation has been too slow to come down, as supply chains continue to be volatile, meaning the costs of everyday essentials remain too high.

And the cost of government borrowing has increased around the world, a shift that Britain, with our high levels of debt left by the previous government, has been particularly exposed to

Ahead of her budget the Chancellor has said she wants the public to better understand why she has made the decisions she has.

My Budget, led by this government style of fairness and opportunity and focused entirely on the priorities of the British people.

Protecting our NHS, reducing our national debt, and improving the cost of living. There has been a lot speculation about the choices that I will make, I understand that.

These are important choices that will shape the future of our country for years to come. I want people to understand the circumstances we are facing, the principles guiding my choices, and why I believe they will be the right choices.

The Chancellor told Britain after her last Budget, which raised our taxes to an all-time high, that she wasn’t coming back for more.

Rachel Reeves is a liar, she’s incompetent and in my view, she won’t last and it’s time for her to go.

Kicking off her speech Reeves has blamed the Conservatives for the state of the economy.

She blamed ‘Liz Truss’ disastrous mini budget’ and the ‘£22billion black hole left by the previous government’ as key reasons for the problems facing Labour.

At the Budget last year, I fixed the foundations, dealing with the aftermath of Liz Truss’s disastrous mini-budget and the £22 billion black hole in the public finances left by the previous government.

I put our public finances back on a firm footing, provided an urgent cash injection into our faltering public services and began rebuilding our economy.

Rachel Reeves is looking at more than a hundred tax and spending measures as she desperately tries to balance the books at the Budget.

The Chancellor is considering a blizzard of measures targeting the ‘wealthy’ as she scrambles to drum up huge sums.

Treasury officials are said to have been ordered to find ways of getting more money out of everyone with incomes of more than £45,000 a year.

Insiders claim that only Brits below that threshold – the bottom two-thirds of earners – are being defined as ‘working people’ to receive protection from Labour’s tax assault.

That effectively brands the top third of earners as ‘wealthy’ – encompassing jobs such as HGV drivers, teachers and head chefs at the Wagamama restaurant chain.

Rachel Reeves must put up taxes by £26billion and break her pledge not to put up income taxes, Labour’s favourite think-tank has warned.

The Resolution Foundation said the scale of the hikes needed meant the Chancellor should ignore the election promise.

It suggested that, even though the financial black hole facing Ms Reeves may be ‘less daunting’ than some fear, she should break the pledge in order to fund the scrapping of the two-child benefit cap as well as Ed Miliband’s net zero plans.

But speculation that the pledge will be abandoned has been growing especially after the PM refused to say recently whether he stood by it.

In the 2024 election manifesto, the party pledged:

We will ensure taxes on working people are kept as low as possible.

Labour will not increase taxes on working people, which is why we will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT.

However with a suspected £50billion black hole to be filled, it is expected that Reeves will u-turn on this promise.

Welcome to the Daily Mail’s live blog on the Chancellor’s pre-budget speech.

Rachel Reeves is set to issue a fresh tax warning this morning, amid growing speculation she is preparing to tear up Labour ‘s manifesto by hiking income tax.

The Chancellor will speak outside of Downing Street today at 8:10am to address ‘speculation’ about the contents of her November 26 Budget – when she is expected to raise taxes by up to £30billion.