Labour government ‘won’t be able to do everything we want’, says Reeves

Rachel Reeves, Labour’s shadow chancellor, has said that a Labour government would not be “able to do everything we want” when taking power because of the economic “mess” caused by the Conservatives.

Speaking to BBC Breakfast following Thursday’s autumn statement, Ms Reeves said: “We don’t know the situation that we are going to inherit and there’s no reason that it has to be as bad as this forecast yesterday.

“That is why we’re urging the Government to urgently put in place those plans for growth so we have a better outlook for the UK economy, a better outlook for our public services, which are on their knees, and a better outlook for our living standards, which at the moment are predicted to decline sharply in the next two years. It doesn’t have to be this way”.

She added that the party would have made “different choices” than the Conservatives in the Autumn Statement.

On Thursday, chancellor Jeremy Hunt unveiled a range of tax-raising measures that will see the tax burden rise to 37.5% of GDP in 2024/25, the highest level since the second world war. 

The most notable tax-raising measures announced were:

  • The freezing of income tax allowances until April 2028.   Treasury forecasts suggest this will see some 92,000 people paying income tax for the first time, with an estimated 130,000 taxpayers now moving up into the 40p bracket.
  • There is a further reduction in the threshold at which people become liable to  the 45p rate of income tax, from £150,000 to £125,140.
  • The halving of the annual dividend allowance and of the capital gains allowance in 2024.  The capital gains tax allowance will then halve again, dropping to £3,000 the following year.
  • The imposition of Vehicle Excise Duty on electric cars for the first time.
  • An increase in the windfall taxes on the energy sector (The Energy Profits Levy) from 25% to 35% between 2024 and 2028, alongside the introduction of a new temporary 45% Electricity Generator Levy.

Speaking on Friday morning, Ms Reeves said the Government could have made “fairer choices” around taxation in the Autumn Statement. 

“For example, the Government could have abolished the non-dom tax status because if you make Britain your home, you should be paying your taxes here and there are still too many people who are not doing that”, she said. 

Ms Reeves accused the Conservatives of hitting ordinary workers “time and time again” with tax rises instead of focusing on those with the “broadest shoulders”.

On the back of the government’s plans, the national debt is now forecast to reduce to 97.6% of GDP in 2025/2026, and 97.3% in 2027/28.

Mr Hunt was also doing the media rounds on Friday morning. He said: “There is nothing Conservative about not tackling inflation. There is nothing Conservative about ducking difficult decisions that put the economy on track. And we have done all of those things and that is why this is a very Conservative package to make sure that we sort out the economy which is one of the most important things that people expect from us as a party”.

Speaking in the commons, the chancellor summed up: “There may be a recession in Russia, but there is a recovery made in Britain”.

Responding on Thursday, Ms Reeves suggested that the Chancellor should have come to parliament to “ask for forgiveness” suggesting that the country was receiving an “invoice” for the “carnage created by the Conservatives”.