A defiant Rachel Reeves has urged Labour MPs to unite behind this week’s budget – but appeared to admit they might not like all of her policies.
Addressing the Parliamentary Labour Party last night, the chancellor described politics as a “team sport” and insisted that tomorrow’s announcements will be “fair”.
Backbenchers are said to have become increasingly frustrated at the prospect of further tax hikes, which come against a backdrop of falling opinion poll ratings.
Ed Conway: Three things the budget boils down to
Ms Reeves argued the budget should be regarded as a package – and not a “pick ‘n’ mix” where MPs “like the cola bottles but not the fruit salad”.
She added that her three top priorities were to cut the cost of living, reduce NHS waiting lists and slash the cost of servicing debt – with £1 in every £10 now spent on interest.
Newspaper reports suggest there were cheers in the room when Ms Reeves vowed to stay in Number 11 and withstand criticism about her handling of the economy.
She was quoted as saying: “I’ll show the media, I’ll show the Tories, I will not let them beat me, I’ll be there on Wednesday, I’ll be there next year, and I’ll be back the year after that.”
The chancellor suggested Labour MPs will be happy with 95% of the budget’s contents, but hinted there are difficult political decisions yet to be announced.
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Setback for Reeves as growth forecasts cut
Yesterday, Sky News revealed that the Office for Budget Responsibility’s growth forecasts are going to be downgraded every year until the current parliament ends in 2029.
Our deputy political editor Sam Coates reports that the government will argue there are “a number of reasons” for the revision.
But he added: “However you cut it, whatever the reasoning, once again, last year, growth will be lower after this budget than before, which is not a great position for a government that had claimed growth as their top priority.”
In some better news for the government, Ms Reeves is expected to announce that she has more headroom than first thought – meaning ministers will be able to claim that the country is no longer in an “economic doom loop”.
“That might well be one of the positive surprises when we actually get to Wednesday’s budget,” Coates added on the Politics At Sam and Anne’s podcast.
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‘I think she’s doing a terrible job’
Meanwhile, Conservative leader Kemi Badenoch has accused the government of stymying growth and pursuing “job-killing measures”.
She told Sky News that she thinks Ms Reeves is “doing a terrible job” as chancellor – and warned Labour should pay close attention to public perception of the budget.
“A lot of people out there in the country, men and women, thinks that she needs to cut tax, and if she raises it, then she should go,” Ms Badenoch added.
At the CBI conference in London yesterday, the Opposition leader urged the government to scrap the Employment Rights Bill – describing it as an “assault on flexible working” that would empower trade unions and drag the UK back to the 1970s.
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Ms Badenoch said: “Killing it would be a signal to the world that Britain still understands what makes an economy grow.
“If the chancellor had any sense, and any regard for business, she would use the budget to say ‘we got this one wrong’ and drop it.”
This Employment Rights Bill includes measures that would ban zero hours contracts, but Ms Badenoch has argued that this would amount to a “de facto ban” on seasonal and flexible work.
The CBI conference marks a difficult anniversary for the government – with attention turning to the speech Ms Reeves gave there a year ago.
Having already delivered her first budget, she had told businesses that she was “not coming back with more borrowing or more taxes” – a statement that flies in the face of what the chancellor is expected to unveil tomorrow.
Read more from Sky News:
What tax rises and spending cuts will be announced?
Analysis: Chancellor’s authority is on shaky ground
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Greens call for wealth tax
In other developments, the Green Party has called on the government to introduce a 1% tax on wealth over £10m – rising to 2% over £1bn. Its estimates suggest this measure could help potentially raise £15bn a year in revenues.
Zack Polanski also wants the rates of capital gains tax, which is currently one of the lowest among G7 nations, to be raised in line with income tax.
He will outline his demands on Mornings With Ridge And Frost ahead of a protest in Westminster.
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Announcements have been gradually trickling through ahead of the budget tomorrow, with the chancellor widely expected to freeze income tax thresholds once again.
Ms Reeves is also set to lift the two-child cap on benefits, with figures suggesting this policy will cost about £3bn a year.
Over the weekend, it was confirmed that rail fares in England will be frozen for the first time since the 1990s – meaning some commuters will save hundreds of pounds on season tickets.
An above-inflation rise to the state pension is planned too, meaning 13 million people will receive an extra £550 a year from April.
