Chancellor Rachel Reeves has confirmed she no longer stands by last year’s pledge not to raise taxes, citing global instability, US tariffs, and higher borrowing costs. Speaking ahead of her Labour Party Conference speech in Liverpool, Reeves said “the world has changed” and Britain is not immune to these pressures.
In a series of interviews, Reeves strongly hinted that VAT will not rise in November’s Budget, insisting that Labour’s manifesto commitments to protect working people remain in place.
Global Pressures Force Policy Reassessment
Reeves first made her tax pledge last year during a speech to the CBI, where she promised no “more borrowing or more taxes.” On Monday, however, she acknowledged that global events have reshaped the economic landscape.
“Whether it is wars in Europe and the Middle East, tariffs from the United States, or the global cost of borrowing, we’re not immune to those changes,” she told BBC Radio 4’s Today programme.
While refusing to be drawn on speculation about specific measures, Reeves dismissed rumors about sweeping tax hikes, saying much of the commentary was “irresponsible.”
VAT Rises Ruled Out
Reeves reiterated that raising VAT would directly hit working families and risk fuelling inflation. On BBC One’s Breakfast programme, she said: “We made a commitment in our manifesto, and those commitments stand. Judge me on my record.”
This position reflects Labour’s election promise not to increase VAT, National Insurance, or income tax for working people.
Reeves Backs Starmer on Reform UK Immigration Row
Reeves also backed Prime Minister Sir Keir Starmer’s condemnation of Reform UK’s immigration plans, which propose revoking settled status for large numbers of immigrants. Starmer branded the policy “racist,” and Reeves agreed, saying it was “a wrong policy.”
“It is one thing to say that people who are here illegally should be sent home – absolutely they should,” Reeves said. “It is quite another to say your colleague at work or your neighbour who contributes to their community should be deported simply because they were not born here.”
Labour is using its conference to contrast its approach to immigration and taxation with Reform UK, which has surged in the polls. Reeves framed her message around economic responsibility balanced with fairness for working people.
