Afternoon summary
Rachel Reeves has refused to rule out tax rises in this month’s budget, insisting she must “deal with the world as I find it, not the world as I might wish it to be”. Here is Heather Stewart’s analysis of the chancellor’s speech.
After the speech gilt prices rose, pushing down the yield (or interest rate) on UK debt, as Graeme Wearden reports in his business live blog.
Caroline Dinenage, the Tory MP who chairs the Commons media committee, has written to the chair of the BBC saying she is “extremely worried” about a report claiming that the corporation selectively editing a Donald Trump speech to overstate the extent to which he was supporting an attack on the US Capitol. The Tory leader Kemi Badenoch said that “heads should roll” at the BBC over the incident. (See 3.21pm.)
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Liberty says proposed law saying police must consider cumulative impact of protests more restrictive than expected
Haroon Siddique is the Guardian’s legal affairs correspondent.
The civil liberties group Liberty has warned that a proposed expansion of anti-protest powers is a blow to the right to protest and worse than anticipated.
As trailed by the home secretary, Shabana Mahmood, last month after the fatal terror attack on a Manchester synagogue, the government has now tabled an amendment to the crime and policing bill introducing restrictions on repeat protests.
The amendment says that when considering whether to restrict a protest a senior police officer “must” take into account any cumulative disruption caused by past protests – regardless as to whether they were organised or attended by the same people.
Earlier this year, Liberty defeated very similar regulations introduced by then home secretary Suella Braverman under the Conservative government, when the court of appeal upheld a legal challenge against anti-protest laws which stated, among other things, that officers “may” take into account relevant cumulative disruption.
Ruth Ehrlich, Liberty head of policy and campaigns, said:
The government’s plans to restrict repeat protests go even further than we had feared, and combined with other anti-protest measures in the pipeline like bans on face coverings, will see the right to protest in the UK stripped to the bone.
Liberty defeated very similar restrictions to this in the courts earlier this year. The fact the government has reintroduced them but with even further reach is a serious blow to people’s fundamental rights.
Police already have extensive powers to restrict protests, yet these measures add to an ever-expanding web of anti-protest laws. It is becoming harder and harder for people to exercise their democratic right to protest without falling foul of the law. Instead of introducing new restrictions, the government should focus on why existing laws are supposedly failing and ensure people’s rights to demonstrate are protected.
More than 30% of people don't realise Labour will be breaking promise if it puts up basic rate of income tax, poll suggests
YouGov has released some polling that looks at six possible tax options for the budget and asks whether or not people would view them as a breach of Labour’s manifesto promises. Given that Rachel Reeves this morning signalled that she will ignore the manifesto (see 1.08pm), the polling may be a bit out of date, because it seems to be premised on the notion that Reeves might opt for partial tax rise that she could present as being technically consistent with the manifesto.
In its manifesto, Labour said:
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.
In some respects the polling is good news for Reeeves; it suggests that more than 30% of people do not realise that putting up the basic rate of income tax would be a manifesto breach.
As the media devotes more coverage to this issue ahead of the budget, the numbers of people who either don’t know this would be a manifesto breach (27%) or think it wouldn’t be (4%) are likely to go down.
One option apparently being considered by the Treasury is a Resolution Foundation proposal that would involve the basic rate of income tax rising by 2p in the pound, offset by employee national insurance being cut by 2p in the pound. (See 10.22am.) You could argue that this would be in keeping with the manifesto, because “working people” would generally not lose out. But 36% of people would see this as a broken manifesto promise, and only 16% of them would not, YouGov found.
Reeves is expected to freeze personal tax thresholds again in the budget. This results in people having to pay more income tax but many policy experts would not regard that as a breach of the manifesto because they interpret the pledge as applying to the rate of income tax, national insurance and VAT – not the overall take. However, according to the poll, the public disagree with the experts. Some 30% of people said freezing the higher rate threshold would be a broken manifesto promise, and only 26% said it wouldn’t be a manifesto breach.
Lawyers tell Lammy that restricting right to jury trial would be 'irremediable error'
Haroon Siddique is the Guardian’s legal affairs correspondent.
More than 100 lawyers have written to the justice secretary warning that adopting the recommendations of a government-commissioned report which could lead to thousands of defendants in England and Wales losing the right to a jury trial would be an “irremediable error”
David Lammy is currently considering proposals by Sir Brian Leveson, the former judge asked by the government to come up with ways to tackle a record courts backlog, which would remove the right to a jury trial for offences such as sexual assault, racially or religiously aggravated strangulation, harassment and child abduction.
The letter, whose signatories include 23 king’s counsel, expresses “deep concern” and urges Lammy to reject the recommendations. It claims they would not reduce the backlog, adding:
Judge alone trials would be an irremediable error both for the longest standing fair trial right in this country for any proposed benefit to the system. The simplest solution is more court sitting days in existing courts, and judges and lawyers to staff them.
Leveson’s recommendations, contained in a 378-page report published in July, included:
-The creation of a new division of the crown court in which a judge and two magistrates hear “either way” offences – those in which the defendant can currently choose to be heard by either a magistrate or a jury in the crown court.
-Removing the right to be tried in the crown court for offences that carry a maximum sentence of no more than two years.
-Reclassifying some either way offences so they can be tried only in a magistrates court.
-Trial by judge alone for serious and complex fraud cases.
Badenoch says 'heads should roll' at BBC over claim selective editing overstated Trump's support for attack on US Capitol
The BBC has been accused of selectively editing a Donald Trump speech to make it appear clearer that he encouraged the US Capitol attack, according to a former external adviser to the corporation. Michael Savage has the story.
In the Q&A after her speech this morning, Kemi Badenoch was asked about the story, but declined to comment because she had not seen it. But, by the time she gave an interview to GB News, she was fully informed, and she let rip, saying “heads should roll” at the BBC. She told the channel”
It’s absolutely shocking. That is fake news, actually putting different things together to try and make something look different from what it actually was.
I do think heads should roll. Whoever it was who did that should be sacked. That’s what Tim Davie should be doing, identifying who put out misinformation and sacking them.
The public needs to be able to trust our public broadcaster. Everyone who’s watching the BBC, everyone with a TV, is paying a licence. We are paying their money. They should not be telling us things that are not true.
The exact extent of Trump’s culpability for the violent attack on the Capitol is something that would have been established by a criminal court, until the charges against him were dropped after he won the presidential election in 2024. Being president means Trump won’t be prosecuted.
But that does not mean that Trump was not implicated. Trump was impeached by the House of Representatives for “inciting an insurrection”.
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UK lawyers warn of ‘race to the bottom’ after Tory MP issues deportation threat
Leading British lawyers have warned of a political “race to the bottom”, after a Conservative MP tipped as future party leader said large numbers of legally settled families must be deported. Geneva Abdul has the story.
Leading British lawyers have warned of a political “race to the bottom”, after a Conservative MP tipped as future party leader said large numbers of legally settled families must be deported.
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Former IFS boss Paul Johnson says it's 'odd' for Reeves to suggest she did not realise manifesto tax promises flawed
During the election campaign last year barely a day went by without the Institute for Fiscal Studies thinktank saying that all the main parties were not being realistic about the fiscal challenges facing the incoming goverment, and that any party that wanted to protect public services would have to put up tax. Paul Johnson was head of the IFS at the time and he says it is “odd” for Rachel Reeves to say she did not realise the finances would be this bad.
Odd speech from chancellor. In one sense fair enough to blame last govt for problems. But wrong to pretend all utterly unexpected and couldn’t possibly have been predicted at election or budget last year. We knew the risks when tax promises were made. And so did she.
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During her Q&A this morning Kemi Badenoch admitted that the last government had made mistakes, but insisted that Rachel Reeves was wrong to blame the Tories for the difficult choices she is having to make in the budget. (See 10.57am.)
Responding to what she said, a Labour spokesperson said:
It’s astonishing that Kemi Badenoch had the gall to gloss over the Tories’ 14-year record of failure. It’s utterly delusional and ignores the reality of the mess they left behind.
The Conservatives oversaw a £114bn hike to the benefits bill, with the shadow chancellor personally overseeing £33bn of that. Kemi Badenoch is treating the public with contempt. The Tories are now pledging billions in unfunded commitments – proving they have zero economic credibility and simply can’t be trusted.
What commentators are saying about Rachel Reeves's speech and Q&A
It is probably now all but certain that Rachel Reeves will break Labour’s manifesto promises and put up income tax in the budget. That is where the commentariat consensus is, five hours after the chancellor’s speech this morning.
That is not something we can report yet as fact. But the hints in the speech this morning went beyond “the clearest sign yet (that income tax will rise)”, to use one of the essential cliches of political journalism.
There is a category of information where something isn’t quite a fact, but it is so widely assumed to be right that it might just as well be. With her speech this morning Reeves landed the ‘broken manifesto promise’ assumption into this space. If/when it happens on 26 November, we will think we knew that already.
Heather Stewart in the Guardian says the chancellor was signalling that she is willing to break Labour’s manifesto promises on tax.
Though she didn’t quite say it explicitly, the combination of weaker economic forecasts from the OBR, and her refusal to make Osborne-style cuts, either in investment or day-to-day spending, points to tax rises in the budget on 26 November.
And she left the door wide open to making those rises in a way that hits more than just those with the “broadest shoulders” – who were noticeably absent from the speech.
“If we are to build the future of Britain together, we will all have to contribute to that effort,” she said. “Each of us must do our bit for the security of our country and the brightness of its future.”
As well as a hint to voters of what is to come – and why – that was meant as a signal to markets that she is prepared to take drastic action, even as far as breaking Labour’s promises, if that is what it takes to stick to her “iron clad” spending rules.
Sam Fleming and George Parker in the Financial Times say that the speech made it clear that Reeves is “on the cusp” of breaking the Labour manfesto promises on tax. They also say she is partly at fault.
In a speech shot through with attacks on the last government, Reeves decried politicians resorting to “short-term sticking plaster solutions, rather than making long-term economic plans”.
She could easily be blamed for similar sins. Labour came into office claiming that higher growth could fix the deep problems in the public finances and help fund improved public services, a claim that few economists believed was sustainable.
Reeves’ first Budget last October was the biggest tax-raising fiscal event in a generation. Yet she left herself only paper-thin fiscal buffers, leaving the Treasury badly exposed to increases in global interest rates.
Jessica Elgot from the Guardian says it was not hard to decode what Reeves was saying.
Rachel Reeves’ answer to @pippacrerar.bsky.social [see 9.21am] makes it crystal clear that Reeves is headed towards breaking a manifesto pledge on tax and how she will frame it - as a necessary response to “the world as it is” when the alternative would be more cuts or borrowing.
Lots of commentary saying that it’s not clear what the point of the speech is. Seems pretty clear to me. It’s pitchrolling broad based tax rises in the Budget and making sure - as Reeves did with the fiscal rule change in 2024 - that it doesn’t surprise the markets on the day.
Reeves says that she will deal with “the world as it is”, talks about productivity downgrade, rejects further spending cuts and borrowing and says “everyone must contribute” - this is not exactly the Enigma code.
George Eaton at the New Statesman says Reeves thinks voters will understand why she is breaking a manifesto promise.
[Reeves’s] defining political judgment is this: that voters are prepared to pay higher taxes for better public services. Polling by Persuasion UK, revealed by my colleague Anoosh Chakelian and studied by the Treasury, shows the public prioritises reduced NHS waiting lists far above Labour’s tax pledges. Reeves today, like Gordon Brown before her in 2002, tied higher taxes to protecting Britain’s “national religion” …
Reeves’s great gamble is that she can yet restore their faith by proving that crumbling public services and economic stagnation are not inevitable. But the risks are considerable: Reform will cry that her tax rises prove that no Labour politician can be trusted; the Tories will charge her with chronic economic mismanagement; the Greens and Lib Dems will ask why she isn’t doing more to tax wealth.
Ben Riley-Smith from the Telegraph says Reeves wants people to understand why the manifesto will be broken.
The takeaway is simple: The Treasury wants the message communicated publicly and loudly that they are considering ripping up manifesto promises on tax.
If this really is a bait and switch - raising the prospect of a breach only to surprise everyone by not doing it at the Budget - it is being adopted with gusto.
The simpler theoretical explanation: The manifesto will be broken and the Chancellor is communicating now, well in advance, the argument for why so it beds in.
Chris Mason from the BBC says Reeves was explaining the context for her budget decisions.
Reeves volunteering to commandeer the broadcasting apparatus of Downing Street – the specially built news conference room in No 9 – tells you everything about the scale of what she is toying with at the end of the month.
Well, I say everything, not quite. The actual choices, the decisions, including which taxes will go up and by how much, will come at the end of the month.
What we got this morning was the argument, the case for what she will do. One senior figure said to me, think of the news conference as being like the first five pages of the chancellor’s speech on Budget Day, in which she sketches out the economic landscape as she sees it before she announces what she is going to do.
Jason Groves from the Mail thinks the speech will only trigger more speculation.
Curious speech from Rachel Reeves. It was billed as an attempt to dampen ‘speculation’ about the Budget, but by confirming taxes will rise without indicating where the pain will hit it looks likely to trigger… more speculation
Jonn Rentoul at the Independent thinks Reeves has not cut spending enough to justify breaking the manifesto.
When it came to the central point, it was addressed in a sentence and a half: “To protect public services from a return to austerity, we will all have to contribute to that effort – each of us must do our bit.”
Thus, she whisked evasively over the only question that matters. People might accept tax rises if they are seen as fair – and part of that fairness means that they have to be accompanied by spending cuts. Without spending cuts, it looks as if she is failing to do everything she can to protect people from the tough decisions. In tough times, it makes sense for government to make do with less.
People might even accept that, if they want decent public services, they have to pay for them. But everyone knows that the disability benefits budget is rising unjustifiably, and that Reeves’s blunt attempt to restrain its growth was thrown out by Labour MPs. An honest chancellor would take that problem head-on and ask Labour MPs to think again before going to the taxpayer for a bailout.
Will Hutton from the Observer says income tax will have to rise.
Some takeaways implicit in the Reeves speech.
The deal with the US to raise NHS drug prices is material - £3-4 bn
Fiscal headroom is going up - expect £20bn
The OBR productivity downgrade is material too - £17.5bn
Fuel duty frozen +vat off energy- £5bn
Income tax rise a must
The Chancellor could not say so, but she confronts a £40 bn challenge. NHS/US drug deal, welfare spending, cost of living package, doubled fiscal headroom , productivity downgrade. Yes, income tax must rise.. but perhaps a strategic root and branch review of property taxes?
Kevin Maguire, the Daily Mirror columnist, thinks the government is about to make a bit misake.
Listening to that Reeves speech I wonder if the UK Government has a death wish.
Green leader Zack Polanski says UK needs 'cost-of-living budget', with wealth taxed fairly
Zack Polanski, the Green party leader, has said that Rachel Reeves’s speech this morning highlights the need for a wealth tax. In a statement he said:
Rachel Reeves breakfast time speech will have left millions spitting out their cornflakes as this was clearly looking to prepare the nation for tax rises. She failed again to say how her government will tackle the cost of living or address the UK’s mushrooming inequality.
Any measures that look to balance the books on the backs of some of the most vulnerable – and those struggling to pay their rent; their food and energy bills – instead of taxing the assets of multimillionaires and billionaires will be the mark of economic, social and environmental failure. This must be a cost-of-living budget. That’s a moral imperative.
An estimated 14.5 million people in the UK – over one in five – live in poverty and just under 3 million people can’t afford to heat their homes.
Meanwhile, billionaire wealth grew by £35m each day in 2024 and Britain’s 50 richest families now hold more wealth than half the population combined.
This cannot go on. We need to tax wealth fairly to address these indefensible levels of inequality, reduce the burden on the poorest and help fund our frontline services that we all rely on.
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SNP claims Labour misled voters because it knew before election it could not keep manifesto tax pledges
And this is what the SNP is saying about Rachel Reeves’s speech, in a statement from the party’s economic spokesperson at Westminster, Dave Doogan.
The Labour party misled voters. They promised things would get better but under Keir Starmer they’ve got even worse.
Brexit Britain is broken and families are being forced to foot the bill for Labour Party failure.
Labour stood on a manifesto promise of not increasing taxes - it’s clear they knew this wasn’t going to be true …With Broken Brexit Britain in constant crisis, Scotland needs a fresh start with independence.
The Liberal Democrats claim that Rachel Reeves’s speech this morning was pointless. Daisy Cooper, the party’s Treasury spokesperson, said:
This wasn’t pitch rolling, it was pointless.
It’s clear that this budget will be a bitter pill to swallow as the government seems to have run out of excuses.
The government can’t keep punishing households, high streets and hospices while big banks, gambling companies and social media giants don’t pay their fair share.
And, in a response from Reform UK, the party’s deputy leader Richard Tice said:
Rachel Reeves has today confirmed what we all knew - she’s going to hammer working people with even more tax rises.
Instead of cutting waste and spending, deregulating and optimising for growth, we are just getting more of the same.
Badenoch says Reeves should blame herself, not Tories, for any tax rises in budget
Peter Walker is the Guardian’s senior political correspondent.
Kemi Badenoch has argued that Rachel Reeves should be blaming herself, not the Conservatives, for any tax rises in the budget.
Answering questions after her own speech in central London on the economy and welfare, Badenoch said:
It is utterly ridiculous to see Rachel Reeves stand there blaming everybody except herself. Unemployment has risen every single month since Labour came into office, but she wants to blame me for that. That’s crazy. She should look at her jobs tax. Look at what she did in the budget.
No one in the cabinet had private sector business experience, Badenoch said.
If we’re going to get our country working again, we need people who understand the economy, people who work in the private sector, people who run a business.
Reeves, she said, “doesn’t have a plan”, adding:
If she had a plan, she would be talking about what she was going to do other than tax rises. All she’s doing is blaming everyone else. This is a chancellor who’s back against the wall. She doesn’t know what she’s doing.
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Badenoch won't say Tories would reverse income tax rise if Reeves announces one
Q: If the government raises the basic rate of income tax, would you reverse it?
Badenoch says Reeves should not be doing that.
But she says, if the government does that, it will change the economic framework the Tories would inherit.
She says the Tories have already promised to reverse some tax increases, like the inheritance tax on farms, VAT on school fees and the windfall tax on energy companies.
Q: Do you agree that the pensions triple lock is unsustainable in the long term?
Badenoch says the triple lock was brought in by the Tories to help pensioners on fixed incomes. She says getting rid of the triple lock would not be a growth policy.
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Q: Isn’t the choice now between tax rises under Labour and austerity under the Conservatives?
No, Badenoch says.
She says there is an alternative – cutting the welfare bill.
Q: You said Nigel Farage’s proposed tax cuts aren’t realistic. So why are yours realistic?
Badenoch claims the Tories have said where theirs would come from.
And they would cut taxes to stimulate economic activity, she says.
Q: [From Sky’s Beth Rigby] Boris Johnson proposed to put up national insurance, in breach of Tory manifesto promises. And Liz Truss broke promises with her mini budget. How can people trust the Conservatives?
Badenoch accuses Rigby of reading out Reeves’s briefing notes.
She says the last government had to deal with the pandemic. She says Labour does not have any justification like that.
Q: Does Reeves have a point when she says the last government put political expediency above the national interest?
Badenoch says “it is utterly ridiculous to see Rachel Reeves blaming everybody except herself”.
Badenoch claims Tory plans to cut red tape would improve productivity
Kemi Badenoch has finished her speech and is now taking questions.
Q: [From ITV’s Carl Dinnen] Reeves said productivity is worse than people realised. How much is that the Tories’ fault?
Badenoch says Reeves should consider what the government has done that might have made this worse. She says productivity fell during the pandemic. She says productivity is particularly bad in the public sector.
And she says the Tories would cut red tape, which would help with productivity.
Badenoch describes Reeves's speech as 'waffle bomb', saying Labour just offering 'managed decline'
Kemi Badenoch is delivering a speech in Westminster now, and she is using it to respond to Rachel Reeves. Her broad argument is that, if Labour were serious about cutting public spending, as she says the Tories, tax rises would not be necessary.
This morning we saw the extraordinary spectacle of a chancellor, just days before a budget, rushed into a panic speech.
We were told that this was the great moment when Labour would show they had a plan for growth.
Instead what we got was a masterclass in managed decline, a chancellor claiming she was 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 chancellor’s speech was one long waffle bomb, a laundry list of excuses.
She blamed absolutely everybody else for the choices, her own decisions, her own failures.
Reeves's speech and Q&A - snap verdict
“Pitch rolling” (see 8.03am) is difficult because it involves managing expectations, and persuading reporters, analysts and voters that something meaningful has been said, without the use of firm, specific announcements. In the circumstances, Rachel Reeves achieved quite a lot.
If there were any people left this morning whole a) had at least took a minimal interest in politics and b) did not realise that the budget is going to involve very large tax increases, they will now be a little wiser. Reeves made it clear to anyone who listened to her speech and Q&A that large tax rises are coming.
Most of us knew that already. What was more interesting was what Reeves said in response to the many questions she got about breaking the manifesto tax promises. On the basis of her replies, it might be rash to say it is 100% certain that this is what Reeves and Keir Starmer will do. But what is apparent is that Reeves has swallowed her objections to that notion. She now seems to have been persuaded by the argument that raising one of the big three taxes she promised not to put up (income tax, national insurance or VAT) would be better than resorting to a short-term fix (see 8.22am, 8.30am, 8.40am and 9.11am) and that voters will accept the case for this decision (see 9.21am). That is a significant shift. Only a few weeks ago, as speculation started to build that the government would have to break a manifesto promise, Reeves was reportedly strongly resistant to the idea.
Some people may suspect that this is all part of some clever expectation management ruse, and that on 26 November Reeves will surprise everyone by not breaking her manifesto pledges. Perhaps. But the chancellor’s plight really is quite dire; it seems far more probable that today she was genuinely hoping to get some credit for candour, not just trying hoodwink pundits in the lobby.
One option Reeves may be considering is the one proposed by the Resolution Foundation – raising income tax by 2p in the pound, but reducing employee national insurance by an equivalent 2p. While this would be a technical breach of the manifesto, Reeves could argue that she was somehow respecting it in spirit (because for most working people the cut would cancel out the rise). The measure would still raise £6bn. In its report today, the Resolution Foundation says:
[This move would] particularly raise taxes on pensioners, the self-employed and some capital income, who all face lower tax rates than working-age employees. But pensioners’ living standards have increased by much more than those of working age – typical pensioner incomes have increased by 21 per cent over the past 20 years compared with just 4 per cent for those of working age – and with the state pension going up £560 next April, only pensioners with incomes above £40,000 would be worse off overall in cash terms.
Reeves says spending cuts proposed by Tories would have 'devastating consequences for public services'
During her speech Rachel Reeves included a passage attacking Reform UK and the Conservatives for their budget proposals. This is what she said;
My opponents will tell you that they could do more.
Reform promised savings from our public services.
And yet in Kent county councill, and councils they run across Britain, apparently they can’t find a single penny and instead plan to increase council tax on more than two million people.
And the Conservatives, who promised £47bn, when, during 14 years in power they oversaw rising welfare costs and a growing civil service. What are they doing for 14 years?
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.
Austerity, reckless borrowing made-up numbers – they are the problems, solutions.
They are the mistakes of the past, which would only take us backwards. I will not repeat them.
Updated
During her Q&A Rachel Reeves was asked if she agreed with Reform UK, who want to stop people with anxiety getting health and disability benefits. Reeves essentially ducked the question, saying it was a matter for health practitioners.
How UK borrowing costs fell as Reeves was speaking
Government borrowing costs fell as Rachel Reeves was speaking, Graeme Wearden reports in his business live blog. He says:
The chancelllor’s promise that she has an ‘iron clad’ commitment to her fiscal rules is probably reassuring bond investors.
The yield, or interest rate, in UK 10-year bonds has dropped by 4.5 basis points (0.045 percentage points) to 4.39% this morning (from 4.43% last night).
The yield on 30-year bonds has dropped by 5 basis points, to 5.166%.
Those are relatively small moves, but certainly moving the way the Treasury would like to see.
While tax rises are unpopular with voters, the bond markets tend to approve of them, and traders may have been responding to the message Reeves was sending.
Reeves says 'we will all have to contribute' in budget to protecting public services
The Treasury has now published the text of Rachel Reeves’s speech on its website. Because it’s on a government website, the party politcal content has been taken out.
The Treasury is calling it a “scene setter” speech.
UPDATE: Here is the passage in the speech where Reeves says “we will all have to contribute” to protecting public services.
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.
Updated
Reeves suggests voters will see doing 'right thing' as more important than sticking to manifesto pledges
Pippa Crerar from the Guardian asked Reeves why she was saying she fixed the foundations of the economy last year when now she is having to come back for more revenue.
In response, Reeves suggested she was referring to the way she changed the fiscal rules last year, which allowed much more investment.
She also said she was determined “to beat those forecasts” on productivity. But she said she had deal with the OBR forecasts; if she just ignored them, then interest rates and inflation would go up.
Crerar also asked how important she thought it was for politicians to keep their promises.
And Reeves replied:
I think it is important that people are honest.
As I said, everyone can see that this year has thrown many more challenges.
It would be possible to cut capital spending, to change the fiscal rules, to make the numbers superficially add up all. But I’m not convinced that would the right thing for our country.
I have to respond to the world as it is rather than the world I might want [it] to be.
I believe, in the end, the public will respond better to doing the right thing than just doing the expedient thing.
Reeves says she and Starmer will put national interest ahead of political expediency 'every single time'
Reeves also told Riley-Smith that she and Keir Starmer would always put the national interest first.
If you ask me what comes first, the national interest or political expediency, it’s a national interest every single time with me. And that’s the same for Keir Starmer too.
Reeves says UK still paying price for Liz Truss's mini budget
During the Q&A Ben Riley-Smith from the Telegraph said that Reeves was saying she was going to do what was right but not popular.
Reeves joked “I’d like to do both.” But she said doing what was right came first.
Riley-Smith asked if she was willing to do that even if it meant losing the next election.
Reeves replied:
The problem of the last 14 years is that political expediency always came about the national interest. And that is why we are in the mess that we are in today.
Reeves also claimed the UK was still paying the price for Liz Truss’s mini budget.
Why are borrowing costs higher in England, 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.
The BBC’s Chris Mason also asked Rachel Reeves how she made such a mess of her home rental arrangements, claiming not to know that she needed a rental licence she had championed those rental schemes hereself.
In response, Reeves just said she had nothing to add to what was said last week in her exchange of letters with the PM.
Q: [From Kitty Donaldson from the i] Hasn’t the PLP made things worse, because it is unfair to raise tax when you are not cutting welfare? And will you get rid of the two-child benefit cap?
Reeves said that it was unfair to blame the PLP (ie, the Labour MPs who voted against the proposed welfare cuts earlier this year) for the UK’s productivity problems. She said the productivity downgrade was “the most impactful thing” in the budget process.
She did not address the two-child benefit cap part of the question.
Updated
Q: [From the FT’s George Parker] Will your budget make life harder for employers?
Reeves said people should not talk the perfomance of the economy down. She said the UK was the fastest growing economy in the G7 in the first half of the year.
She said she recognised the need not to discourage employment.
Q: [From the BBC’s Chris Mason] What do you say to people who think you are about to break manifesto promises?
On the budget, Reeves said that today she wanted to explain to people the context in which the budget decisions will be made. She said she would act in the national interest.
She said other parties had to set out their alternative plans. Reform UK is just offering “fantasy economics”, he said.
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Q: You must have known about this productivity problem at the time of the election. Shouldn’t you have been more honest with people then?
Reeves said at the last budget she did act to address a £22bn black hole in the accounts.
And she says chancellors had to use OBR forecasts. She respected the independence of the OBR, she said.
Reeves says she's being 'honest', and she won't follow previous governments in ducking difficult choices
Robert Peston from ITV News went next.
Q: You have made the cases for raising taxes by billions. Is that what you will do?
Reeves repeated the point about not announcing the decisions today.
But she said she would not duck difficult choices.
As chancellor, I could do what previous governments have done, which is to sweep those challenges under the carpet, to cut capital spending, to make the numbers not up.
But then we’d be back here in a year, in five years’ time, with productivity still in its knees, growth under-performing … national debt continue to, to rise.
So I’m being honest with people.
At the election, I said that we would put the national interest first.
People can see that things are changing, that the global circumstances, are challenging, and I hope they will see at the budget on 26 November that the focus on getting the debt down or getting NHS waiting lists and getting the cost of living down, which continues to be people’s number one concern.
Reeves says she has to face world 'as it is' as she refuses to say she'll stick to manifesto pledges on tax
Reeves is now taking questions.
Beth Rigby from Sky News goes first.
Q: Will you stick to your manifesto promise not to raise the taxes that working people pay? And, if you won’t, doesn’t that make a mockery of the trust people put in you at the election?
Reeves replied:
I will set out the individual policies of the budget until the 26th of November. That’s not what today is about. Today is about setting the context up for that budget.
And your viewers can see the challenges that we face, the challenges that are on a global nature. And they can also see the challenges in the long-term performance of our economy. And the Office for Budget Responsibility will set all that out. They’ve done the review of the supply side of the economy that looks at the past, but they use the past to predict the future.
As chancellor, I have to face the world as it is, not the world that I want it to be.
And when challenges come our way, the only question is the how to respond to them, not whether to respond, or not.
And as I respond on the budget 26 November, my focus will be on getting NHS waiting lists down, getting the cost of living down and also getting the national debt down.
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Reeves rejects calls to ignore fiscal rules and raise borrowing
Reeves says some people are saying she should “sidestep” her fiscal rules.
But she rejects that, she says:
No accounting trick can change the basic fact that government debt is sold on financial markets. There are limits on the price the banks, hedge funds and pension funds are willing to pay for our debt, and we are competing constantly with other countries also selling debt.
The more that we try to sell, the more it will cost us.
It is important that everyone, the public and politicians understand that reality.
The less we spend on debt interest, the more we can spend on the priorities of working people, NHS, our schools, our national security, the public service essential to both a decent society and a stronger economy.
Reeves says the choices in the budget will be focused on getting inflation falling, and allowing interest rates to be cut “to support economic growth and improve the cost of living”.
Reeves says, at the last budget, she changed the fiscal rules to allow more investment and put more money into public services.
She says she is proud of those decisons.
But I know that real progress takes time.
Our growth was the fastest in the G7 in the first half of this year … And I know that there is more to do.
The first part of our planning reforms will add an additional £6.8bn to the size of our economy in the next five years.
But the next part of planning bill must complete its passage through parliament before it can make a difference.
Interest rates, which rose from 0.1% to 5.25% in the last parliament, have now been cut five times to 4%.
Reeves says she is not interested in “relitigating old choices”.
Instead, “it’s about being honest with the people, about the consequences” of those decisions.
Reeves says past governments have put 'political convenience' ahead of 'economic imperative'
Reeves says previous government have failed to make the investment decisions Britain needed.
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 – that’s 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 … Crucial capital investment continually sacrificed and hard decisions put off again and again.
And then a rushed and ill-conceived Brexit – the further disruption as businesses trying to trade were faced with extra costs and extra paperwork.
All this meant that when the pandemic arrived, our country was underprepared, public services weakened and our economy fragile.
We finished the pandemic with higher tax rates and higher debt, and our peers.
Reeves says UK's productivity is worse than previously assumed
Reeves says at the budget the OBR will set out the conclusions of its review into the supply side of the UK economy.
She says she won’t pre-empt their conclusions.
But it is already clear that the productivity performance the government inherited is worse than thought.
That has consequences for working people, for their jobs, for their wages, and it has consequences for the public finances, too, in lower tax receipts.
She says this is not a reflection on how hard people work. It is about the problems caused because “workers don’t have the tools that they need”, like “trains that run on time”.
Reeves says welfare needs to be reformed.
There is nothing progressive about refusing to reform a system that is leaving one in eight young people out of education, or employment.
Reeves says economic challenges facing UK have got worse since last year's budget
Reeves says she started to fix the foundations in last year’s budget.
I put our public finances back on a firm footing, provided an urgent cash injection into a faltering public services and began rebuilding our economy.
But since that budget, the world has thrown even more challenges our way.
The continual threat of tariffs has dragged on global confidence, deterring business investment and dampening growth.
Inflation has been too slow to come down. And 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 a high levels of debt left by the previous government, has been particularly exposed to.
And, in an uncertain world we also face pressure to increase our defence spending, and it is right that we do that, protecting ourselves from hostile actors and supporting our allies.
Reeves says UK has suffered 'years of economic mismanagement'
Reeves says the UK has great strengths.
But years of economic mismanagement has limited our country’s potential, with long-term issues continually unchecked, potential unrealised.
Rachel Reeves is speaking now.
She says at the budget she will make the choices necessary for a strong economy.
She says:
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.
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.
I want 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.
This is the passage briefed in advance.
Here are some of the newspaper front pages previewing Rachel Reeves’s speech.
Rachel Reeves is due to start her speech at 8.10. There is a live feed at the top of the blog.
Tax rises at budget ‘inevitable’, Resolution Foundation thinktank warns
This morning the Resolution Foundation, a leading thinktank whose former chief executive, Torsten Bell, is now a Treasury minister helping to write the budget, has published a 40-page report on budget options. As Graeme Wearden reports in his business live blog, it calculates that fiscal consolidation worth £31bn will be needed, involving tax rises worth £26bn.
The Resolution Foundation urge Reeves to take steps to increase her headroom, to as much as £20bn, to send a clear message to markets that she is serious about fixing the public finances.
They have calculated that doubling the fiscal headroom to £20bn and allowing for cost of living support would require £31bn of fiscal consolidation. And with limited scope for spending cuts, tax rises of £26bn are therefore likely to be needed.
Avoiding touching the three big taxes – VAT, income tax and national insurance (NI) – “risks doing more harm than good”, they argue (even though Labour promised in their manifesto not to raise them).
Resolution also argue that the chancellor could offset a 2p rise in income tax with a 2p cut in employee national insurance, raising £6bn while protecting workers from these tax rises.
Graeme has more on his business live blog.
Graeme is covering the chancellor’s speech too. I’ll be focusing more on the political implications and reaction, he will be focusing more on the business and markets implications and reaction, and there should be plenty for us both to say without too much overlapping.
Starmer tells his MPs Reeves will deliver 'Labour budget built on Labour values'
Keir Starmer perhaps gave a clearer hint as to what is coming in the budget when he addressed Labour MPs in private last night at a meeting of the PLP (parliamentary Labour party). This is what Jessica Elgot and Pippa Crerar are reporting in their splash story.
Starmer told MPs on Monday night it would be a “Labour budget built on Labour values” and promised it would protect the NHS, reduce debt and ease the cost of living.
The prime minister gave MPs a hint at how the government would frame its potential manifesto breach – saying it was “becoming clearer that the long-term impact of Tory austerity, their botched Brexit deal and the pandemic on Britain’s productivity is worse than even we feared”.
Starmer told the grim-faced crowd of MPs, many sceptical of the potential manifesto breach, that there would be “tough but fair decisions” – saying the choice of the Conservatives and Reform would be “to return us to austerity”.
MPs in the meeting repeatedly grilled Starmer on whether the budget would lift the two child benefit cap, in what one described as “coordinated” pressure on the prime minister.
MPs in the meeting repeatedly grilled Starmer on whether the budget would lift the two child benefit cap, in what one described as “coordinated” pressure on the prime minister.
While nobody raised concerns over a manifesto breach explicitly, at least one MP spoke about the necessity that the public “know what we stand for”. However, the absence of any direct confrontation over the manifesto may give Starmer and Reeves some confidence that they are not facing a major backlash from within the parliamentary Labour party.
Last night the Treasury released an extract from the speech that Rachel Reeves will give at 8.10am. For the record, this is what she is expected to say.
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.
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.
At face value, these words reveal very little; they are what almost any chancellor might say ahead of almost any budget.
But they are being interpreted as confirmation that taxes will go up – and the Treasury is not making any attempt to persuade people that that reading is wrong.
Rachel Reeves to give speech preparing ground for budget tax rises
Good morning. David Cameron is credited with popularising the term “pitch rolling” in Westminster, to describe the process whereby politicians prepare the public for difficult announcements by shaping the argument in advance. It is a metaphor with connotations of a gentle game of cricket, and pleasant summer afternoons.
Today Rachel Reeves is engaged in a classic piece of “pitch rolling”. But her task is more daunting. She won’t be flattening the odd bump; she has to shift some colossal PR obstacles, which is more a task for a fleet of JCB diggers.
That is because, when she delivers the budget three weeks tomorrow, she will have to fill fiscal gap reportedly as high as £30bn. That means tax rises, which are never an easy sell. But it also means going back on the promise she made to the CBI last year when she said she would not need to raise taxes again on the scale she did in autumn 2024. And there seems to be a very real chance that she will also decide to raise income tax, which would be a direct breach of a promise Labour made in its election manifesto.
Reeves is giving what is billed an important speech at 8.10am. As Jessica Elgot and Pippa Crerar report in their preview story, Reeves will “lay the groundwork for a tax-raising budget that could break Labour’s election promise on income tax, in a major speech in which she will be “candid” about the tough choices ahead”.
Here is the agenda for the day.
8.10am: Rachel Reeves, the chancellor, gives a speech in Downing Street.
Morning: Keir Starmer chairs cabinet.
9.30am: The ONS publishes sexual offences crime data sexual offences from the Crime Survey for England & Wales 2024/25.
10am: Kemi Badenoch gives a speech in Westminster.
10.30am: The Commons defence committee takes evidence from journalists about the Afghan data breach.
11.30am: Reeves takes questions in the Commons.
Noon: Downing Street holds a lobby briefing.
After 12.30pm: MPs debate two Tory opposition day motions, one calling for the abolition of business rates for retail, hospitality and leisure premises on the high street, and the other calling for people with “lower-level mental health conditions” to stop getting health and disability benefits, and for reforms to the Motability scheme.
2.30pm: Prof Brian Bell, chair of the migration advisory committee, gives evidence to the Commons home affairs committee.
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