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Rachel Reeves has called on Labour MPs to come together in support of her upcoming Budget, reaffirming her commitment to remain as chancellor for the foreseeable future. Addressing the Parliamentary Labour Party on Monday evening, she emphasized the importance of unity for securing victory in the next general election. The Budget, set for release on Wednesday, is anticipated to include tax increases after weeks of speculation.
Reeves acknowledged that while most Labour MPs—around 90-95%—would approve of her spending proposals, they must also accept the more difficult elements of the plan. She framed the Budget as a comprehensive package, stating, “It’s a package, not a pick-and-mix. You can’t say you like the cola bottles but you don’t like the fruit salad.” Her three main objectives are to reduce living costs, shorten NHS waiting lists, and lower the cost of debt. Responses from MPs after the meeting were mixed; one described Reeves as “strong and honest,” while another found her calls for unity somewhat “desperate.”
Over the past year, some Labour MPs have grown increasingly critical of Reeves’s decisions, particularly following reversals on policies like the winter fuel payment cut. There have also been party concerns regarding potential income tax rate increases, which would contravene the party’s manifesto commitments. At present, the government appears to have stepped back from raising income tax rates directly. Instead, alternatives under consideration include extending freezes on income tax and National Insurance thresholds. This approach would gradually increase tax liabilities on wages and pensions as more people cross into taxable bands.
Additionally, the chancellor might implement other smaller revenue-raising strategies, such as new taxes on expensive homes, electric vehicles, and gaming companies. Such measures are intended to address a public finance shortfall estimated at around £20 billion, aligning with Reeves’s goals for reducing borrowing and debt. She has also proposed ending the two-child benefit cap, a policy limiting benefits for third children born after April 2017. The triple lock on state pensions, which adjusts payments by at least 2.5%, earnings growth, or inflation, is expected to remain intact. Meanwhile, critics including Conservative shadow chancellor Mel Stride caution that the Budget risks pushing tax burdens onto financially stretched workers via the benefits system. Business groups and opposition parties have voiced concerns as well, with the Confederation of British Industry urging Reeves to avoid numerous small tax hikes and the Liberal Democrats accusing Labour of hypocrisy over its tax threshold freezes
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