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Reeves 'not immune' to criticism over NI hike Reeves 'not immune' to criticism over NI hike
(about 1 hour later)
Rachel Reeves: I'm not immune to criticismRachel Reeves: I'm not immune to criticism
Chancellor Rachel Reeves has defended increasing taxes for employers in last week's Budget while saying she is "not immune" to the criticism she has received.Chancellor Rachel Reeves has defended increasing taxes for employers in last week's Budget while saying she is "not immune" to the criticism she has received.
However, she told the BBC money had to be raised in order to put public finances on a "firm footing".However, she told the BBC money had to be raised in order to put public finances on a "firm footing".
The decision to increase National Insurance contributions made by companies has come under fire from many businesses, including GPs who argue it could hit services for patients. The decision to increase National Insurance (NI) contributions made by companies has come under fire from many businesses, including GPs who argue it could hit services for patients.
The new Conservative Party leader Kemi Badenoch criticised the move telling the BBC it would not result in growth and would "make all of us poorer".The new Conservative Party leader Kemi Badenoch criticised the move telling the BBC it would not result in growth and would "make all of us poorer".
Appearing on Sunday with Laura Kuenssberg, Reeves was asked whether there was any chance she would rethink the National Insurance rise for employers. Appearing on Sunday with Laura Kuenssberg, the chancellor was asked whether there was any chance she would rethink the NI rise for employers.
"I'm not immune to their criticism," she said, "but we've got to raise the money to put our public finances on a firm footing"."I'm not immune to their criticism," she said, "but we've got to raise the money to put our public finances on a firm footing".
Wednesday's Budget outlined policies to increase spending by almost £70bn a year over the next five years.
About half of this is being funded by tax increases, with the other half coming from a rise in borrowing.
The National Insurance rise for employers is set to raise £20bn a year making it one of the biggest single tax-raising measures in history.
From next April, employers will have to pay NI at 15% on salaries above £5,000, instead of 13.8% on salaries above £9,100 currently.From next April, employers will have to pay NI at 15% on salaries above £5,000, instead of 13.8% on salaries above £9,100 currently.
The Institute of General Practice Management, which represents GP practice managers, has estimated the rise will put up the tax bill of the average surgery by around £20,000 a year.The Institute of General Practice Management, which represents GP practice managers, has estimated the rise will put up the tax bill of the average surgery by around £20,000 a year.
Reeves told the programme raising employer NI had not been on the party's agenda before the general election. Reeves denied that raising employer NI had been considered by Labour before they came to power.
"No, this was not something that was on the agenda before the election," she said.
Asked if she had been wrong to say during the election that there would not be any extra taxes if Labour won, she replied: "What I was wrong about was the mess that the previous government had left for us," citing the £22bn black hole that Labour say the Tory party left them with.Asked if she had been wrong to say during the election that there would not be any extra taxes if Labour won, she replied: "What I was wrong about was the mess that the previous government had left for us," citing the £22bn black hole that Labour say the Tory party left them with.
Earlier in an interview with Sky News, Reeves had said "I was wrong on June 11, I didn't know everything" when she said during the election that higher taxes would not be needed. Earlier on Sunday, in an interview with Sky News, Reeves had said "I was wrong on June 11, I didn't know everything" when she said during the election that higher taxes would not be needed.
The chancellor told the BBC the previous Conservative government cut NI contributions made by workers without the money to do so, but she had not reversed the move because it would be a "direct breach" of Labour's manifesto.
The chancellor said Labour had had to make "difficult choices", but she believed the economy was now "on a strong footing".
Asked if she could rule out putting up more taxes during this parliament, Reeves said she was "not going to write four or fives years' worth of Budgets" on the programme.
However, she said that Labour's pledge "not to increase for working people the key taxes they pay - income tax, National Insurance and VAT - that is a commitment for the duration of this parliament".
Also on Laura Kuenssberg, Badenoch said the Conservatives would be thinking about the economy "in a different way", which would be "completely the opposite" of what Labour was doing.Also on Laura Kuenssberg, Badenoch said the Conservatives would be thinking about the economy "in a different way", which would be "completely the opposite" of what Labour was doing.
She criticised the rise in employers' NI contributions as being "not coherent" as most of the increase would be passed on through lower wages and higher prices but she did not say whether or not she would reverse it. She criticised the rise in employers' NI contributions as being "not coherent" as most of the increase would be passed on through lower wages and higher prices, but she did not say whether or not she would reverse it.
However, Badenoch did say she would reverse the VAT hike on private schools, calling it a "tax on aspiration that won't raise any money".However, Badenoch did say she would reverse the VAT hike on private schools, calling it a "tax on aspiration that won't raise any money".
Changes to the rules around inheritance tax have also come under fire since they were announced in the Budget, with farmers angry about the loss of exemptions. Farming row
Changes to the rules around inheritance tax have come under fire since they were announced in the Budget, with farmers angry about the loss of exemptions.
From April 2026, inherited agricultural assets worth more than £1m, which were previously exempt, will have to pay inheritance tax at 20% - half the usual rate.From April 2026, inherited agricultural assets worth more than £1m, which were previously exempt, will have to pay inheritance tax at 20% - half the usual rate.
Rebecca Wilson, a fifth-generation farmer from Yorkshire, told the programme that while on paper their farm was a valuable asset, "we rarely have surplus cash in the bank" and they could be facing a tax bill of nearly £1m when her parents died. Rebecca Wilson, a fifth-generation farmer from Yorkshire, told the Laura Kuenssberg programme that their farm could be facing a tax bill of nearly £1m when her parents died.
Reeves said a farm owned by two people could pass on "£3m essentially tax-free" and there would be 10 years to pay any tax owed.Reeves said a farm owned by two people could pass on "£3m essentially tax-free" and there would be 10 years to pay any tax owed.
She added that "only a very small number of agricultural properties will be affected, but last year the benefits of agricultural property relief, 40% of the benefit was felt by 7% of the wealthiest land owners". She added that only "a very small number" of farms would be affected, but said last year 40% of the tax relief fell to "7% of the wealthiest land owners".
"I don't think it is affordable to carry on with a relief like that when our public finances are under so much pressure.""I don't think it is affordable to carry on with a relief like that when our public finances are under so much pressure."
The Budge introduced tax rise on inherited land and pensions, as well as private school fees and second homes.
However, Reeves said it "wasn't an ideological Budget".
"It was a Budget where we had to raise £40bn pounds to put our public finances on a firm footing, and also to ensure that our state schools, our NHS are properly funded."