Reeves refuses to rule out tax rises if Labour finds black hole in public finances

Rachel Reeves has refused to rule out tax rises beyond income tax, national insurance and corporation tax if Labour finds a black hole in the public finances once it enters government.

In an interview with Sky News, the shadow chancellor swerved questions on whether the government books might be worse than anticipated if Labour wins the election, and how the party would raise the money to deal with pressing issues.

The shadow chancellor said her plans were fully funded, but existing tax rises were there only to fund commitments already made, and insisted: “We have no plans for increased taxes.”

But pressed on whether she would raise other taxes if there was a black hole on entering government, she said: “I’m not going to write a budget here.”

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The shadow chancellor draws a distinction between income tax, national insurance and corporation tax , saying her party had “already ruled out” rises for the parliament.

But Ms Reeves declined to engage with the question of what would happen if she finds a black hole on entering government – with some Labour figures expecting immediate cost pressures from the creaking prison service, bust local councils and the need to fund vast compensation schemes including infected blood at the next budget.

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“There are no further increases in tax that we are planning or that we need to fill any black holes,” she said.

Analysts point out that Labour has not made any commitment not to raise VAT, and is already extending that tax to private schools.

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“We don’t need to increase VAT because we don’t need to increase any taxes because all of our plans, unlike the Conservatives’, are fully costed and fully funded and people can have confidence in that – there will be nothing that we put forward that we can’t explain where the money’s going to come from.”

Ms Reeves spoke to Sky News on the same day that she delivered a campaign speech from Derby, in which she declared Labour to be the “natural party of British business” – and that included paying bosses large salaries.

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‘Labour is party of British business’

In her first major speech of the election campaign, the shadow chancellor sought to persuade voters Labour is now pro-business and pro-workers.

She also said the party would bring the UK closer to the European Union, something Labour has previously announced, and “bring investment back to Britain”.

Ms Reeves also criticised the Conservatives for promising to cut taxes for pensioners by creating a new “age-related” tax-free allowance – dubbed the “triple lock plus”.

Currently, people can receive £12,570 a year of their pensions before they start paying income tax on them – the same figure as the personal allowance for those who work.

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But if the party wins the next election, a pensioner’s allowance would rise in line with either average earnings, inflation or by 2.5% – whichever is higher – from next April, echoing the rules on annual state pension increases.

The shadow chancellor accused Rishi Sunak of “desperately adding more baubles to a Christmas tree”.

“The truth is, unless you can be really clear about where the money’s going to come from, then these sums just don’t add up and therefore they’re not deliverable.

“And that’s the question people have to ask at this election. Do they want another five years of chaos and decline under the Conservatives, or a changed Labour Party offering stability? And frankly, after what we’ve had these last few years, stability is change.”

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