Starmer refuses to rule out further tax rises or more borrowing
Sir Keir Starmer has refused to rule out further tax rises or additional borrowing when challenged to repeat his Chancellor’s pledge not to “come back with more”.
During Prime Minister’s Questions (PMQs) in the House of Commons on Wednesday, Conservative opposition leader Kemi Badenoch asked Starmer about Rachel Reeves’ words.
She said: “At the Confederation for British Industry (CBI) conference on Monday, the Chancellor said – and I quote – ‘I’m clear, I’m not coming back with more borrowing or more taxes’.
“I know that telling the truth to this House is important to the Prime Minister, so will he repeat his Chancellor’s pledge now?”
Starmer declined to repeat Reeves’ promise, and told the House: “We set out our position at the Budget, which was just set out.
“We’re fixing the foundations. We’re dealing with the £22bn black hole that they left.”
In response to Reeves’ Budget, Institute for Fiscal Studies director Paul Johnson said the Chancellor has made a “gamble” that a “big cash injection for public services over the next two years will be enough to turn performance around, and that many of the temporary spending pressures won’t persist”.
He cautioned: “If she’s wrong about that, and spending pressures don’t dissipate after two years, then to avoid cutting unprotected areas she may well need to come back with another round of tax rises in a couple of years’ time – unless she gets lucky on growth.”
The Prime Minister added: “I’m not going to write the next five years of Budgets here at this despatch box, but we said we wouldn’t hit the payslips of working people.
“We’ve passed the Budget. We’ve invested in the future, and we’ve kept that promise.”
Badenoch then hit back, insisting Reeves’ pledge was “as worthless” as Labour’s manifesto.
She argued: “He’s not fixing any foundations – he’s making everything worse.
“The whole House would have heard him refuse to repeat the Chancellor’s pledge, a pledge as worthless as the manifesto promises that he’s talking about.
“If he is fixing foundations, why is it that the PMI (purchasing managers’ index) index shows that business confidence has crashed since the Budget?”
But Starmer responded: “I notice that having come here criticising the national insurance rises over and over again, on Monday, she admitted that she wouldn’t reverse the position that was set out.”
Shadow financial secretary Gareth Davies said: “On Monday at the CBI, Reeves said she would not be coming back with more borrowing or taxes. Today the Prime Minister refused to repeat that, following the business secretary doing the same yesterday.
“It is clear from business, charities, workers, and even the independent Office for Budget Responsibility (OBR) that as a result of the budget there will be fewer jobs, higher inflation and less growth.
“The Prime Minister knows he is going to have to come back for more. His refusal to back up his Chancellor in the House of Commons today basically confirms it.”
Reeves has come under pressure in the wake of her October 30 Budget, including from farmers and family businesses over changes to the inheritance tax (IHT) regime.
Ministers have also faced pushback from firms and industry lobby groups who warn the combination of the minimum wage rise and the increase in employers’ national insurance contributions (NICs) will have a chilling effect on jobs, hiring, and investment.
Economists have warned the government may not be able to guarantee they will “avoid another round of large tax rises” despite “a clear desire” to, as associate IFS director Ben Zaranko put it.
He said: “It’s possible that the Chancellor will find a way to square the circle. She might get lucky on growth… The Bank of England might cut interest rates by more than markets currently expect. Any or all of those things would be a big help.
“But if the Chancellor isn’t blessed with good fortune, there’s every likelihood that her spending plans don’t survive contact with the spending review process, and that a more generous settlement requires another round of tax rises.
“That’s especially true if global developments weigh on growth or necessitate rapid increases in the UK defence budget.”
While some warn the Budget could prove detrimental to the government’s goals.
David Dike, director at the Economic Research Council, wrote: “The necessity to raise substantial funds to support public expenditure has led to decisions that may have unintended consequences.
“The increased burdens placed on certain groups could hinder economic growth and undermine the very recovery the Budget seeks to promote.”