Rachel Reeves has confirmed ahead of her speech to the Labour party conference that she no longer stands by a pledge last year not to raise taxes , saying “the world has changed” due to a mixture of conflicts, US tariffs and higher borrowing costs.
In a series of broadcast interviews before she addressed the gathering in Liverpool on Monday, the chancellor strongly hinted, however, that VAT was not due to rise in November’s budget.
She also backed Keir Starmer’s description of Reform UK’s plan to retrospectively strip the right of large numbers of immigrants to live in the UK as racist, saying the policy idea was completely different to ones that removed people who did not have the right to be in the country.
Speaking to the CBI in November last year, Reeves said she was “not coming back with more borrowing or more taxes” – even though this pledge was less about tax rises as such than about major increases on the scale of her first budget.
Asked on BBC Radio 4’s Today programme on Monday where she stood on the statement about more borrowing or more taxes, Reeves replied: “Well, look, I think everyone can see in the last year that the world has changed, and we’re not immune to that change.
“Whether it is wars in Europe and the Middle East, whether it is increased barriers to trade because of tariffs coming from the United States, whether it is the global cost of borrowing, we’re not immune to any of those things.”
Asked about the idea that tax rises could include a rise in VAT, Reeves indicated strongly this was not the case. The chancellor is understood to believe raising VAT would be hit working people directly and would stoke inflation.
Asked about the tax on BBC One’s Breakfast programme, she said: “We made a commitment in our manifesto, and those commitments do stand. And they stand for a reason, because in the last parliament it was ordinary working people who bore the brunt of the economic mismanagement.”
Pushed on whether that meant she was “saying no rise in VAT”, Reeves replied: “We made those commitments for a reason, and those commitments stand and judge me on my record.”
But speaking to Today, she hit out at speculation about what could be in the budget.
“There are a lot of people who claim to know what is going to be in my budget. They don’t,” she said. “A lot of them are talking rubbish, and frankly, a lot of it is very irresponsible. People were told last year that I was going to do this, I was going to do that, and people made decisions with their money that often were irreversible decisions.”
Asked about Starmer’s comments on Sunday that Reform’s plan to deport people who have settled status in the UK was “racist”, Reeves said she agreed.
“You’ve got to call out policies when they’re wrong. And this is a wrong policy,” she told Today. “Now there’s one thing to say that people who are here illegally should be sent home. Absolutely they should. And we’ve got record numbers out of this country.
“It is quite another thing to say the person who is sitting next to you at work today, who was born abroad, should be deported. Quite a different thing to say your next-door neighbour who goes to work every day and contributes to our country, sends their kids to the local school, volunteers at the community centre – because they weren’t born here, they’re going to be deported.”
