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Reeves eyeing £40bn in tax rises and spending cuts | Reeves eyeing £40bn in tax rises and spending cuts |
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Chancellor Rachel Reeves is looking to make tax rises and spending cuts to the value of £40bn in this month’s Budget, government sources have told the BBC. | Chancellor Rachel Reeves is looking to make tax rises and spending cuts to the value of £40bn in this month’s Budget, government sources have told the BBC. |
At a political cabinet meeting this morning, Reeves told ministers that filling the "£22bn black hole inheritance from the previous government" would only be enough "to keep public services standing still". | At a political cabinet meeting this morning, Reeves told ministers that filling the "£22bn black hole inheritance from the previous government" would only be enough "to keep public services standing still". |
Reeves is now drawing up plans to find £40bn in order to avoid real-terms cuts to departments, sources say, as first reported in the Financial Times, external and the Times, external. | Reeves is now drawing up plans to find £40bn in order to avoid real-terms cuts to departments, sources say, as first reported in the Financial Times, external and the Times, external. |
Reeves warned ministers there would be "difficult decisions on spending, welfare, and tax" to come in her October Budget. | |
The chancellor is finalising details of her first Budget, to be announced on Wednesday 30 October. | The chancellor is finalising details of her first Budget, to be announced on Wednesday 30 October. |
She recently said there would be "no return to austerity" under this government and promised a boost to government investment, designed to kickstart growth. | She recently said there would be "no return to austerity" under this government and promised a boost to government investment, designed to kickstart growth. |
A HM Treasury spokesperson said: "We do not comment on speculation around tax changes outside of fiscal events." | A HM Treasury spokesperson said: "We do not comment on speculation around tax changes outside of fiscal events." |
In an interview with BBC Breakfast on Tuesday, Sir Keir Starmer did not rule out a National Insurance increase for employers in the Budget. | |
Treasury officials are reportedly exploring National Insurance on employer pension contributions to raise Budget revenue. | |
Employers pay NI, external at a rate of 13.8% on all employees' earnings above £175 per week, but pension contributions made by employers are currently exempt from the levy. | |
The prime minister side-stepped questions over whether Labour’s manifesto promise not to raise taxes for "working people" covered employers' NI too. | |
The Labour Party's 2024 manifesto ruled out raising taxes for "working people", such as National Insurance, income tax and VAT. | |
On Monday, Reeves said Labour's election pledge not to increase NI on "working people" related to the employee element, as opposed to the sum paid by employers. | |
Leading business groups in the UK raised concerns over the potential tax rise, warning that it would "hobble" economic growth and "hammer" the hospitality sector. | |
Would raising employer National Insurance break Labour's pledge? | |
The prime minister is adamant that he will not be drawn on Budget speculation in advance of the formal announcement in just over a fortnight. | |
That is the standard position that governments adopt given these are market-moving measures – and in this particular case the Budget will be the biggest political and economic moment for this government so far. |