Rachel Reeves has “no regrets” over potential breaches of Labour’s manifesto pledge not to raise certain taxes in the upcoming Budget, her spokesperson said.
It comes as the pound has fallen to a six-month low after Ms Reeves refused to rule out hiking taxes to plug a hole in the public finances in the pre-Budget address on Tuesday morning.
Sterling fell 0.3 per cent to $1.3064 - its weakest since April. The FTSE 100 Index meanwhile fell deeper into the red after the speech, down 1 per cent or 92.5 points lower at 9608.9.
The chancellor refused to rule out breaking Labour’s manifesto pledge not to raise income tax, VAT or National Insurance – saying “each of us must do our bit” as she paved the way for tax rises in her Budget later this month.
A leading think tank has warned that tax rises are “inevitable”, but said there was a way to implement them that “boosts confidence in the economy and the public finances, while also reducing child poverty and the cost of living”.
Following the speech, Sir Keir Starmer’s spokesperson backed Ms Reeves and pointed to “fresh challenges”, including tariffs deterring business investment and dampening growth, high inflation and the increasing cost of borrowing.
Key Points
- Reeves sets stage for tax rises in unorthodox pre-Budget speech
- Reeves refuses to rule out tax rises
- Badenoch criticises chancellor's 'waffle bomb' speech
- Reeves acknowledges tax speculation in pre-Budget speech
- Tax rises 'inevitable' leading think tank warns
- Economists urge Reeves to make ‘difficult’ choices to boost market confidence
Explainer: What is a wealth tax – and would it work in the UK?
18:00 , Nicole Wootton-CaneToday we heard chancellor Rachel Reeves refuse to rule out hiking taxes, despite Labour’s manifesto promises.
An increasing number of campaigners have said a “wealth tax” could shore up government funds, and likely without forcing ministers to row back on pledges. This is an economic policy adopted by very few countries, which focuses on the ultra-rich.
Albert Toth has been speaking to tax experts Dan Neidle and James Meadway about what that could look like - and how likely it is to happen...
Foreign minister accuses Tories of being 'reckless' in blocking Chagos Islands legislation
17:30 , Nicole Wootton-CaneA foreign minister has accused the Conservatives of being “reckless and deeply cynical” in trying to block legislation enabling the handover of sovereignty of the Chagos Islands to Mauritius.
Baroness Chapman of Darlington argued opposition attempts to wreck the agreement were not about the welfare of the Chagossians but “a cynical tactic of delay and disruption”.
The Labour frontbencher levelled her criticism as peers debated the Diego Garcia Military Base and British Indian Ocean Territory Bill.
In an unusual move the Tories had put down an amendment to the committal motion, allowing the draft law to proceed to detailed scrutiny at committee stage, which demanded a 30-day consultation with the Chagossian community.
In the face of a threatened defeat, the Government pulled the motion, effectively delaying the passage of the Bill.
Why is Britain handing over the Chagos Islands to Mauritius?
ICYMI: ‘More than a hundred tax and spending plans’ being considered by Reeves ahead of Budget
17:09 , Nicole Wootton-CaneRachel Reeves is reportedly considering more than a hundred tax and spending plans ahead of the Budget.
It comes amid concerns the fiscal watchdog could be about to downgrade the UK’s productivity performance.
The Office for Budget Responsibility (OBR) – which handed the chancellor its latest set of projections for the economy last week – is expected to downgrade the UK’s performance on productivity at the Budget, with fears that it could represent a further £20bn gap in the public finances.
Millie Cooke has more below...
Reeves considering ‘more than a hundred tax and spending plans’ ahead of Budget
It would be 'irresponsible' to pursue the 'easy answers', says Reeves
16:50 , Shaheena UddinThe Independent’s political correspondent Millie Cooke reports:
Rachel Reeves has argued it would be irresponsible to pursue the easy answers, insisting "politicians of recent years have become addicted to shelling out for short term sticking plaster solutions rather than making long-term economic plans".
In yet another hint that she will take painful decisions at November's budget, Ms Reeves said that while she "understands the urge for easy answers", such a move would be irresponsible.
Farm Inheritance Tax plan was the 'right decision' treasury ministers say
16:20 , Shaheena UddinFarmers will be taxed on inheritance next year, as treasury ministers have stood by their previous decision.
The Government made "the right decision" at last year's budget to end a full tax relief for farmers, when they pass on agricultural property, Exchequer Secretary, Dan Tomlinson said.
This will involve farm landowners paying inheritance tax at an effective rate of up to 20 per cent on their farm land from April 2026, but means they can pass on agricultural and business estates worth up to £1 million without facing a bill.
Labour backbenchers called on Mr Tomlinson to look at tweaking the plan, based on a report by the Centre for the Analysis of Taxation (CenTax).
CenTax suggested a "minimum share rule", so that landowners whose farms and businesses make up a small share of their estate - less than 60% - would see an increased tax rate.
This could fund an exemption from paying inheritance tax on land worth up to £5 million, the think tank found.
Economists urge Reeves to make ‘difficult’ choices to boost market confidence
16:00 , Nicole Wootton-CaneRachel Reeves has been urged to make “difficult” choices by economists ahead of the Budget later this month.
The chancellor has to plug a shortfall of around £22bn, according to some estimates, to restore faith in the British economy.
Experts have now warned she should aim to double her fiscal headroom to reassure markets that the Government was focused on economic stability.
Economists urge Reeves to make ‘difficult’ choices to boost market confidence
Afghan data leak superinjunction left democracy in ‘deep freeze’, say journalists
15:34 , Shaheena UddinJournalists have attacked the previous government’s “Orwellian leap” in the use of a gagging order to cover up a massive data leak which potentially put more than 100,000 Afghans at risk.
The superinjunction used by the Ministry of Defence (MoD) followed the February 2022 leak of details of thousands of Afghans, who feared they were in danger from the Taliban because of their links to UK forces and wanted to apply for sanctuary in Britain.
The Independent’s home affairs correspondent Holly Bancroft was among the journalists praised for their ‘grit and determination’ in exposing the saga.
Afghan data leak superinjunction left democracy in ‘deep freeze’, say journalists
Watch: Rachel Reeves refuses to rule out hiking income tax, VAT or National Insurance in Budget
15:31 , Shaheena UddinRachel Reeves, said: “As Chancellor, I have to face the world as it is, not the world that I want it to be.
“When challenges come our way, the only question is how to respond to them, not whether to respond or not.”
“As I respond at the budget on the 26th of November, my focus will be getting NHS waiting lists down, getting cost of living down and also getting the national debt down.”
Recap: How could inheritance tax change at the Budget?
15:30 , Nicole Wootton-CaneRachel Reeves has refused to rule out raising taxes in this month’s Budget - despite Labour promises to freeze them.
The chancellor has said that she will not be making “easy choices” at the fiscal event on 26 November, after research by the Institute for Fiscal Studies (IFS) indicated she may need to find at least £22bn to shore up the economy.
One tax that could see increases without Labour breaking its manifesto pledges is inheritance tax.
Albert Toth has taken a look at the potential changes...
Kemi Badenoch brands Rachel Reeves’ pre-Budget speech ‘one long waffle bomb’
15:00 , Nicole Wootton-CaneKemi Badenoch has called Rachel Reeves’ speech this morning “one long waffle bomb”.
The leader of the Conservative Party said the address was a “laundry list of excuses” while giving her own speech in London on Tuesday.
Mrs Badenoch said Ms 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”.
You can read more below...
Kemi Badenoch brands Rachel Reeves’ pre-Budget speech ‘one long waffle bomb’
Scottish Labour leader says he will cut income tax if elected
14:30 , Nicole Wootton-CaneThe leader of Labour in Scotland has refused to say whether Rachel Reeves will break the party’s manifesto commitment not to raise taxes - but added he would cut it in Scotland if elected.
Anas Sarwar said taxpayers will have to “wait and see” what is in the Chancellor’s Budget on November 26.
Asked if he can guarantee Labour will not break its manifesto pledges, Mr Sarwar told the PA news agency: “Let’s wait and see what’s in the Budget in a few weeks’ time.
“She is the UK Chancellor that’s responsible for income tax in England and Wales.
“Income tax in Scotland is the responsibility of the Scottish Government, and actually the only person that’s been campaigning loudly for the last two years for a rise in income tax in England and Wales is John Swinney, and he’s the very same man negotiating the fiscal framework.”
Income tax in Scotland is currently higher for middle and higher earners compared to those living in England.
Mr Sarwar said taxes are “too high” in Scotland and he is “clear” Scottish Labour will bring down the tax burden if the party wins next year’s Scottish election.
Chancellor has 'no regrets' if Labour break promise not raise taxes in Budget
14:00 , Nicole Wootton-CaneRachel Reeves does not regret potential breaches of Labour’s manifesto promise not to raise certain taxes, her spokesman said.
Asked whether she does, a spokesman for the Chancellor told reporters: “No. And again, I think she’s been asked this question previously.
“Those manifesto commitments were made because we recognised that working people had been asked to pay the price of 14 years of Conservative failure.”
Pressed on concerns that breaking manifesto pledges could further erode public trust in politicians, Sir Keir Starmer’s spokesman said: “Voters put their trust in Government to make tough decisions, not just popular ones.
“We’ll do whatever is necessary to protect families from high inflation and interest rates, protect our public services and guarantee the investment necessary for our economic future.”
The official pointed to “fresh challenges”, including tariffs deterring business investment and dampening growth, high inflation and the increasing cost of borrowing.
Downing Street insist speech was 'setting out broad context'
13:43 , Athena StavrouDowning Street insisted the Chancellor’s remarks this morning had been about “setting out the broad context” for her decisions at the Budget amid questions about the intention of her speech.
Asked why the Government would not explicitly use the phrase “tax rises”, the Prime Minister’s spokesman said: “I think the Chancellor has been clear this morning that she is not going to get ahead of the Budget in a few weeks’ time.
“That will be set out then and not beforehand. But as I say, this morning was about setting out the broad context for that Budget. As she said, the public can see the challenges that we face.”
Asked what the point of the speech was, he said: “The Chancellor said she’d be upfront with the public about the problems facing Government, and that’s exactly what she did.
“People deserve to know about the economic choices we have to take, and why we have to take them, and that’s what she set out this morning.”
John Rentoul: Rachel Reeves came to reassure us… but ended up on the rack
13:31 , Athena Stavrou
Watch: Rachel Reeves refuses to rule out hiking income tax, VAT or National Insurance in Budget
13:11 , Athena Stavrou'No more tax on business', industry leaders say
12:55 , Athena StavrouKey business figures have urged Rachel Reeves to make sure there is ‘no more tax on business’ at her next Budget.
Jonny Haseldine, Head of Business Environment Policy at the British Chambers of Commerce, said the chancellor’s ambitions to grow the economy, reduce inflation and boost productivity will not be possible “if costs continue to pile up on firms”.
“That’s why our message is clear – no more tax on business,” he said. “The Chancellor spoke this morning about choices, hitting firms in the pocket once again would be the wrong choice.
“Our latest research shows business confidence and investment levels continue to suffer. A fifth of firms are expecting lower turnover for the next year, and a quarter have scaled back investment plans.
“Improving the business landscape requires a Budget that boosts trade, tackles the skills problem and turbocharges infrastructure.
“Firms across the UK are already feeling bruised and many are struggling to keep their heads above water.
“November 26th is a make-or-break moment for British business – the Budget must deliver.”
Sean O'Grady: Forget alarm-clock Britain – Reeves was talking to the bankers
12:48 , Athena Stavrou
Forget alarm-clock Britain – Reeves was talking to the bankers
Which taxes could rise at next Budget?
12:30 , Athena StavrouRachel Reeves appeared to pave the way for significant tax increases in a major pre-Budget speech, as she said “easy answers” were off the table.
Here are some of the other options the chancellor may be considering ahead of the Budget on 26 November:
Analysis: It won't just be those with the 'broadest shoulders' facing tax rises
12:30 , Athena StavrouThe Independent’s political correspondent Millie Cooke reports:
Rachel Reeves has given her strongest hint yet that she will raise income tax across the board, saying "we will all have to contribute" to building a new future for Britain.
This is a break from her typical insistence that "those with the broadest shoulders" would have to pull their weight to restore Britain's ailing public finances.
Instead, the chancellor appears to be preparing the public for tax rises that could hit even middle income earners - and those who are likely to come under the government's (admittedly vague) definition of "working people", in breach of their manifesto pledge.
Income tax rises or fairer reforms? Join The Independent Debate on the Budget choices facing Rachel Reeves
12:09 , Athena Stavrou
Manifesto u-turn 'a sign of desperation'
11:59 , Athena StavrouRachel Reeves has been warned that if she backtracks on Labour’s tax promises, it could be seen as a “sign of desperation”.
“Increasing taxes to enable social investment is a good thing if planned effectively, but breaking manifesto commitments like this is a sign of desperation that could backfire economically and politically,” director of campaign group Compass, Neal Lawson, told The Times.
“This is the inevitable outcome of a hyperfactional obsession that rejects progressive economic arguments in the name of party control: the country is now paying the price.”
Chancellor must 'fix dysfunctional tax system' before ordinary households pay more - IPPR
11:43 , Athena StavrouThe Institute For Public Policy Research has said Rachel Reeves must “fix our dysfunctional tax system” before “asking ordinary households to chip in”.
Reacting to today’s speech, Carsten Jung, associate director for economic policy at IPPR, said: “The Chancellor is right to be straight about the fiscal challenges ahead and reiterate that cutting public spending is not the right answer to these pressures.
“Taxes will likely have to increase at the autumn budget, and there are ways to do this in a fair and pro-growth way.
“The fair thing to do is to reform our dysfunctional tax system to make those with unfair advantages contribute more before asking ordinary households to chip in. This can make the tax system more efficient and mean that investing in the UK remains attractive. With the cost of living a key focus, the priority must be to increase revenue to launch a war on bills.”
Badenoch: Government 'given up' on 'living within its means'
11:29 , Athena StavrouKemi Badenoch accused the Labour Government of having given up on trying to “live within its means”, saying that to do so “is not austerity, it is respect for taxpayers”.
The Tory leader said: “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”.
Full story: Rachel Reeves prepares for tax rises in Budget as she tells nation: ‘we will all have to contribute’
11:18 , Athena Stavrou
Reeves prepares for tax rises in Budget saying ‘we will all have to contribute’
Watch live: The Independent’s Holly Bancroft give evidence to MPs on Afghan data breach
10:54 , Athena StavrouElsewhere in Westminster today, the Defence Committee is meeting over the Afghan data breach and super-injunction.
The Independent’s Social Affairs Correspondent Holly Bancroft is giving evidence to the committee.
Her reporting revealed that a huge Ministry of Defence data breach put the lives of up to 100,000 Afghans at risk and prompted thousands of them to be evacuated to Britain under a covert £7bn scheme – then was kept secret for almost two years by an unprecedented superinjunction.
You can watch live here:
Watch live: The Independent’s Holly Bancroft give evidence on Afghan data breach
FTSE 100 down after Reeves speech
10:46 , Athena StavrouThe Independent’s Business and Money Editor Karl Matchett reports:
The FTSE 100 is down 1.2 per cent this morning as markets react to the chancellors' speech - though the drop is far from entirely down to the chancellor's Budget plans.
Most major European indices were already in the red beforehand: France's CAC 40 is down 1.8 per cent, Germany's DAX is the same and the Euronext 100 isn't far behind at -1.6 per cent for the morning.
Among the London-listed stocks which are falling are the mining groups - Fresnillo, Glencore and Antofagasta are all down 2.5 to 4.3 per cent - while Primark owner ABF is down 3.7 per cent after lower profits and talk of splitting off the retail group.
That said, Reeves' chatter was hardly reassuring for businesses and the London Chamber of Commerce and Industry (LCCI) have already reacted by saying further tax rises would be "deeply damaging to both London and the wider UK economy".
Reeves reserves front row of her press conference for influencers
10:31 , Athena StavrouThe Independent’s political correspondent Millie Cooke reports:
Rachel Reeves controversially reserved two seats on the front row of the Downing Street press briefing room for social media influencers as she laid the groundwork for a swathe of tax rises at next week's budget.
It comes after it was revealed that the government forked out nearly £115,000 for “influencer marketing” in less than a year, despite pledges to cut wasteful spending.
The two influencers were given pre-selected questions at the press conference, which saw the chancellor argue "we will all have to contribute" to building a new future for Britain.
Badenoch brands chancellor's speech as 'one long waffle-bomb'
10:22 , Athena StavrouKemi Badenoch has criticised Rachel Reeves’ speech this morning, dubbing it “one long waffle bomb”.
“This morning we saw the extraordinary spectacle of a chancellor just days before a Budget, rushed into a panicked speech,” she said.
“We were told that this was the great moment that Labour would show they had the plan for growth. Instead what we got was a masterclass in managed decline.
“A chancellor claiming she’s just going to set the context, but instead of clarity business leaders are none the wiser, investors are confused, workers are anxious because the truth is Labour doesn’t have a plan to get Britain working again.”
The Tory leader added: “The chancellor’s speech was one long waffle-bomb. A laundry list of excuses, she blamed absolutely everybody else for her own choices, her own decisions her own failures.”
'Labour has given up': Badenoch
10:17 , Athena StavrouKemi Badenoch is delivering a speech now in response to the chancellor’s pre-Budget address this morning.
She said “Britain has stopped working” and that “Labour has given up”, criticising the government’s tax policies for businesses.
What is happening in Westminster today?
10:00 , Athena StavrouIt’s been a busy morning in UK politics, with the chancellor having delivered a rare pre-Budget speech earlier.
Sir Keir Starmer will now chair a Cabinet meeting.
Also happening imminently is a speech delivered by Tory leader Kemi Badenoch in Westminster.
At 11am, there will be Treasury questions in the Commons.
TUC: Reeves should consider capital gains tax before income tax
09:56 , Athena StavrouThere has been plenty of reaction to the chancellor’s speech this morning, including from the head of the Trade Union Congress (TUC).
TUC General Secretary Paul Nowak said the Budget must be “ambitious for Britain” and said Rachel Reeves is “absolutely right to focus on the improving the cost of living and rebuilding services”.
However he added: “Before considering income tax rises for higher earners, the government must do much more to ensure that the wealthiest pay their fair share.
“That includes looking at increasing capital gains tax, upping the tax on gambling companies and making the banks pay a little bit more after they cashed in on eyewatering profits.”
Analysis: Reeves message - buckle up Britain
09:47 , Athena StavrouThe Independent’s Whitehall Editor Kate Devlin reports:
Make no mistake, this is a key moment for this Labour government, and quite possibly a make - or-break speech for Rachel Reeves’ political career.
In it she set out what she sees as the difficulties in the UK economy ranging all the way back to the David Cameron era.
Be in no doubt - the chancellor was attempting to soften up the public to accept major tax rises in her budget.
She warned that we all “have to do our bit” to secure Britain's economic future.
Her core message to viewers this morning - in a speech timed to hit families as they eat their breakfast before the school run and drivers commuting into work- is that there is an awful lot of pain ahead.
Buckle up, Britain.
Borrowing costs fall but Sterling dips during speech
09:39 , Athena StavrouThe UK economy reacted to Rachel Reeve’s rare pre-Budget speech on Tuesday morning.
The value of sterling fell against the dollar and the euro in the wake of the Chancellor’s speech.
The pound - which was already lower ahead of the speech - fell 0.34 per cent to at 1.31 US dollars.
This is not far off last week's over two-year low against the single currency.
The FTSE 100 Index meanwhile fell deeper into the red after the speech, down 1 per cent or 92.5 points lower at 9608.9.
However, yields on UK government bonds fell to 4.38 per cent, while the 30-year yield dropped to its lowest level since April at one stage.
The gilt yield is the cost of borrowing money for the government.
The higher the yield is, the more interest is payable on the debt - which, as Ms Reeves has noted, is extremely high.
Wealth management firms warn speech is 'preparing ground for painful measures'
09:24 , Athena StavrouInvestment and wealth management firm Quilter have said Reeves’ speech is “preparing the ground for some painful measures”.
“Rachel Reeves’s pre-Budget speech was all about preparing the ground for some painful measures later this month,” Rachael Griffin, tax and financial planning expert at Quilter said.
“She knows this Budget will define her credibility, and her message today was clear that Britain’s finances are in a worse state than many realise, and everyone will be expected to play their part in putting them back on track.”
She added: “But while her argument against renewed austerity will appeal to many scarred by the last decade, it also lays the groundwork for a different kind of pain, which is higher personal taxes to rebuild public finances. She’s made it clear she is happy to be unpopular if it helps secure public finances.”
Analysis: Reeves refuses to rule out breaking manifesto pledges on tax
09:11 , Athena StavrouThe Independent’s Whitehall Editor Kate Devlin reports:
The chancellor today refused to rule out breaking her manifesto pledges on tax - to not raise VAT, national insurance or income tax.
She was repeating what the prime minister did at PMQs last week - failing to stick to a key promise Labour made to the public at the general election just last year.
Indeed, she was even asked “is it fair to put up income tax, as you probably will, when you can't get the welfare bill down” - an assertion she did not knock down.
In reality her speech was designed to highlight to the public that tax rises are coming.
The nation’s finances are in such a state that they will have to.
Ms Reeves’ speech today was about trying to ensure who gets the blame for that - as she pointed the finger at her predecessors.
But Labour now faces two key tests of faith with the electorate. Not just raising taxes, but also, crucially, breaking their promises not to.
Watch: Chancellor paves way for Budget tax hikes as she warns 'easy answers' won't fix economy
09:02 , Athena StavrouExplained: UK borrowing costs fall
08:58 , Athena StavrouThe Independent’s Business and Money Editor Karl Matchett reports:
Government borrowing costs have fell as Rachel Reeves delivered her pre-Budget speech.
The 10-year gilt yield slid six basis points to 4.38 per cent, while the 30-year yield fell to its lowest level since April.
The gilt yield matters - in particular to the government right now - in two ways.
Firstly, it's the most important sign of the money markets trusting her moves, or at least that she'll do what she's saying she will.
Remember the Liz Truss debacle? The gilt yield on 30-year bonds shot more than 1 percentage point higher in the aftermath.
Secondly and more practically speaking, it's the cost of borrowing money for the government.
The higher the yield is, the more interest is payable on the debt - which, as Ms Reeves has noted, is extremely high.
Reeves refuses to rule out tax rises
08:52 , Athena StavrouRachel Reeves has refused to rule out hiking income tax, VAT or National Insurance to plug a hole in the public finances in a major pre-Budget speech.
The chancellor has hinted she will take painful decisions later this month as she said “easy answers” to fix economic issues would be “irresponsible”.
When asked whether she would raise taxes for working people, she said: “I will set out the individual policies of the budget on the 26th of November. That’s not what today is about. Today is about setting the context up for that budget.”
Reeves says she does not have ‘anything more to say’ on rental licence row
08:50 , Athena StavrouThe Independent’s Whitehall Editor Kate Devlin reports:
The chancellor refused to be drawn after last week's row over her failure to get the correct licence to rent out her south London property.
She pointed to the judgement of the PM’s ethic adviser last week and added “I don’t have anything more to say on that”.
She was thrown a lifeline when her estate agent issued a statement admitting a mistake and apologising.
An email from Harvey & Wheeler to Ms Reeves’s husband appeared to show the firm had offered to obtain the licence on their behalf.
But reports at the weekend suggested she had been warned of the need for a licence by a second estate agency.
Pound falls as Reeves gives pre-Budget speech
08:41 , Athena StavrouThe pound has fallen as Rachel Reeves gives an unusual pre-Budget speech adding fuel to speculation she will hike taxes.
Sterling dropped 0.3 per cent to $1.3100 as government bonds gained, Bloomberg reported.
It said the 10-year gilt yield slid six basis points to 4.38 per cent, while the 30-year yield fell to its lowest level since April.
Reeves tries to distance Labour government from Britain’s economic woes
08:38 , Athena StavrouThe Independent’s Whitehall Editor Kate Devlin reports:
The chancellor has launched a blistering attack on everyone from David Cameron to Nigel Farage as she attempted to distance herself from the UK’s faltering economy.
She said that any chancellor from any party in her position would be facing the tough choices she is in this Budget.
She attacked Cameron and Osborne’s austerity policy at the start of the last decade saying that it “dealt a hammer blow to our economy”.
Subsequent Tory governments were responsible for instability and indecision, which saw “hard decisions put off again and again”.
That was compounded by a “rushed and ill thought through Brexit” which meant when the pandemic arrived the UK was “under prepared” she said.
She also took a barely concealed swipe at current Tory leader Kemi Badenoch and Nigel Farage when she attacked those she claimed just wanted “easy answers”.
But, despite the chancellor’s argument, Labour’s woeful poll ratings suggest it is not at all clear that after more than a year in power the public blames her predecessors and not her for the state of the economy.
Reeves highlights global challenges in pre-Budget speech
08:35 , Athena StavrouChancellor 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.
In a speech setting out the challenges she will face in her Budget later this month, she said “the world has thrown even more challenges our way” in the last 12 months.
“The continual threat of tariffs has dragged on global confidence, deterring business investment and dampening growth,” she told reporters in Downing Street.
“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.”
Reeves takes the fight to Reform and the Tories
08:32 , Athena StavrouThe Independent’s political correspondent Millie Cooke reports:
Rachel Reeves is now taking the fight to her opponents, Reform UK and the Tories, saying they would repeat the "mistakes of the past which would only take us backwards".
The chancellor promised to strive for "more productive and more efficient public services", hitting out at Reform's running of local authorities.
“My opponents will tell you that they could do more. Reform, who have promised savings from our public services, and yet, in Kent County Council and councils they run across Britain, apparently they can't find a single penny, and instead are going to increase council tax for more than 2 million people", she said.
Hitting out at the Tories, she added: “They oversaw rising welfare costs and a growing civil service. What were they doing for 14 years?”
And pointing to the party's promise of £47bn pounds of cuts, the chancellor said: “Let us be clear, there is no way that cuts on that scale, equivalent to cutting our entire armed forces or cutting every single police officer in the country twice over could be delivered without devastating consequences for our public services.”
Reeves acknowledges tax speculation in speech
08:26 , Athena StavrouIn an unusual move, the chancellor has acknowledged speculation about what could be in her upcoming Budget.
She said during the speech in Downing Street on Tuesday morning: “There is a lot of speculation about the choices 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 for the country.”
It would be 'irresponsible' to pursue the 'easy answers', says Reeves
08:23 , Athena StavrouThe Independent’s political correspondent Millie Cooke reports:
Rachel Reeves has argued it would be irresponsible to pursue the easy answers, insisting "politicians of recent years have become addicted to shelling out for short term sticking plaster solutions rather than making long-term economic plans".
In yet another hint that she will take painful decisions at November's budget, Ms Reeves said that while she "understands the urge for easy answers", such a move would be irresponsible.
Chancellor gives strongest hint yet of £20bn productivity downgrade
08:19 , Athena StavrouThe Independent’s political correspondent Millie Cooke reports:
While the chancellor said she won't pre-empt the conclusions of the UK's fiscal watchdog, the Office for Budget Responsibility, she has given her strongest hint yet that they will downgrade their productivity forecasts - a move which is expected to leave a £20bn hole in the public finances.
“Poor productivity means we're putting in more but getting out less", Rachel Reeves explained.
“It means too many businesses and workers don't have the tools that they need.”
Reeves sets the stage for sweeping tax rises
08:16 , Athena StavrouThe Independent’s political correspondent Millie Cooke reports:
Rachel Reeves has said she put the public finances on a firm footing at the last budget - but argued that, since then, "the world has thrown even more challenges our way".
The chancellor has once again left the blame at the door of the previous government, pointing to "Liz Truss's disastrous mini budget and the 22 billion pound black hole in the public finances".
She also pointed to Donald Trump's tariffs and the demand for increased defence spending as she set the stage for sweeping tax rises expected in three weeks time.
Chancellor making major pre-Budget speech set to pave way for income tax hikes
08:12 , Athena StavrouRachel Reeves is making a major pre-Budget speech amid mounting speculation she is preparing to hike income tax to plug a hole in the public finances.
The major address will see her set out her three priorities for the fiscal event – cutting hospital waiting lists, the national debt and the cost of living.
Speaking on Tuesday, the chancellor said: “Later this month, I will deliver my second Budget as chancellor. At that Budget, I will make the choices necessary to deliver strong foundations for our economy – for this year, and years to come.
“It will be a budget led by this government’s values, of fairness and opportunity, and focused squarely on the priorities of the British people – protecting our NHS, reducing our national debt and improving the cost of living.”
What was Labour's manifesto pledge on tax?
08:04 , Athena StavrouSpeculation has mounted about the possibility the chancellor will break one of Labour’s main manifesto pledges on tax.
In their 2024 manifesto, the party promised not to raise any of the main taxes.
It vowed not to “increase taxes on working people”, meaning they would not raise National Insurance, the basic, higher, or additional rates of Income Tax, or VAT.
Watch live: Rachel Reeves to pave way for tax rises in pre-Budget speech
07:54 , Athena StavrouReeves gears up to roll the pitch for tax rises
07:48 , Athena StavrouThe Independent’s political correspondent Millie Cooke reports:
Rachel Reeves is about to give a deeply unusual pre-budget speech in Downing Street, where she is expected to roll the pitch for possibly manifesto breaking tax rises.
Acknowledging growing speculation over possible tax rises, the chancellor will argue that it is important the public understands the circumstances facing the country.
The Downing Street press briefing room, packed with hacks waiting for the chancellor to arrive, is emblazoned with signs reading: "Strong foundations, secure future" - a nod to the longer term vision for Britain Ms Reeves is expected to set out when she takes the stage in half an hour.
Speech comes amid increasing speculation of tax rises
07:39 , Athena StavrouThe chancellor’s address is set to come after weeks of reports of planned tax rises as she scrambles to fill a black hole of up to £50bn in the public finances.
Rachel Reeves has warned of “harsh global headwinds” battering Britain’s economy, as well as arguing that Brexit had an even bigger impact than critics predicted.
Further fuelling speculation over tax rises, Sir Keir Starmer last week declined to stand by Labour’s manifesto pledge not to raise VAT, income tax or national insurance paid by working people.
He has previously said the commitment the party made to voters before the 2024 general election “stands”, but failed to repeat that assurance in the Commons. His press secretary also avoided using the phrase.
Chancellor to pave way for tax rises in pre-Budget speech
07:33 , Athena StavrouThe chancellor will use a speech today to pave the way for sweeping tax rises expected to be announced at the end of the month, pledging to make “important choices that will shape our economy for years to come”.
In a major pre-Budget address, she will set out her three priorities for the fiscal event – cutting hospital waiting lists, the national debt and the cost of living.
Ms Reeves is expected to promise a Budget “led by this government’s values, of fairness and opportunity and focused squarely on the priorities of the British people”.
Acknowledging growing speculation over possible tax rises, she will argue that it is important the public understands the circumstances facing the country.
Tax rises 'inevitable' leading think tank warns
07:30 , Athena StavrouTax rises are “inevitable”, a leading think tank has warned hours before Rachel Reeves sets out her Budget priorities.
The Resolution Foundation has said that there was a way to implement the “inevitable” tax rises that “boosts confidence in the economy and the public finances, while also reducing child poverty and the cost of living”.
In its pre-Budget review, the Resolution Foundation have said the chancellor should aim to double her fiscal headroom in her statement to the Commons on 26 November.
This would result in the buffer against unexpected changes in economic headwinds increasing to £20bn, but the think tank acknowledged that an increase of £15bn was “perhaps” more realistic.
“This would send a clear message to markets that she is serious about fixing the public finances, which in turn should reduce medium-term borrowing costs and make future fiscal events less fraught,” the report said.
Reeves to promise ‘fairness’ in Budget as income tax hike speculation mounts
07:19 , Tom BarnesRachel Reeves will promise a Budget of “fairness and opportunity” amid mounting speculation that she is preparing to hike income tax to plug a hole in the public finances.
In a speech from Downing Street on Tuesday, the Chancellor is expected to say she will “make the choices necessary to deliver strong foundations for our economy” for “years to come”.
Ahead of her remarks, No 10 repeatedly refused to re-commit to Labour’s manifesto pledges – fuelling speculation that its promise to avoid hiking income tax looks set to be broken.
Ms Reeves is expected to lay out three key priorities of cutting national debt, easing the cost of living and protecting the NHS, adding: “It will be a Budget led by this Government’s values, of fairness and opportunity and focused squarely on the priorities of the British people.
“You will all have heard a lot of speculation about the choices I will make. I understand that – these are important choices that will shape our economy for years to come.
“But it is important that people understand the circumstances we are facing, the principles guiding my choices – and why I believe they will be the right choices for the country.”
The speech is a bid to roll the pitch for a difficult autumn statement on November 26, in which the Chancellor is widely expected to raise taxes to balance the books in the face of weak growth and higher borrowing costs.
Economists at the Institute for Fiscal Studies have already predicted that she would need to find £22 billion to restore the £10 billion of headroom she previously left herself against her self-imposed debt targets.
David Lammy set to lead PMQs on Wednesday
16:52 , Shaheena UddinDeputy Prime Minister, David Lammy, will be leading PMQs for the first time tomorrow (Wednesday 5 November) in place of Prime Minister Keir Starmer.
This is due to the PM travelling to the Cop climate change conference.
In the prime minister's absence the deputy prime minister or First Secretary of State usually replies:
“I have been asked to reply on behalf of my right honourable friend the Prime Minister” and then the give the reason for the PM’s absence.
The reason for this phrasing is that historically, the prime minister may be questioned only as to those matters that the prime minister is directly responsible for.
Such matters are relatively few in number, because many substantive matters are handled by the other Cabinet ministers.
