The British public will never forgive Reeves and Labour for this tax betrayal

The Chancellor only has herself to blame for the dire state of the economy Daily Telegraph 04/11/25 link Tory austerity wrecked productivity. Brexit hammered exports. And the war in Ukraine and President Trump’s tariffs have driven up the cost of borrowing. The Chancellor Rachel Reeves was clear who was to blame in her lecture to the nation this morning on the worsening state of the public finances, setting out the arguments for why she will, as now seems inevitable, raise income tax in the Budget later this month.

But hold on. In reality, she has only herself to blame – and the public will quite rightly never forgive either Reeves or her party for the huge betrayal that lies in store. It was a high-risk gamble. Instead of surprising everyone in the Budget on November 26, Reeves chose to make a major speech, setting out the dire state of the economy. She specifically refused to rule out tax rises. It now looks certain income tax will go up. The purpose of today’s statement was to prepare the way for that. The only question that remains is how much income tax will go up, and whether it will be the basic rate, or just the higher rate that rises. Sure, you can make an argument for that. An increase in income tax is better than most of the alternatives. It will do less damage to the economy than another round of levies on businesses, entrepreneurs, or the few remaining wealthy people who haven’t already fled for Dubai or the Caribbean. And it means that voters can no longer pretend that the bills can simply be paid by the rich: if they want a Labour government, they will have to pay more for it. And yet, the harsh truth is this. She has only herself to blame for the dire state of the public finances. On taking control of Number 11 last year Reeves made a whole series of major decisions. She caved into demands from the unions for higher wages without asking for higher productivity in return. She approved huge increases in spending on expensive follies such as Great British Energy and the National Wealth Fund. She hammered businesses with a huge rise in National Insurance, killing a recovery that was underway, and destroying the labour market. She allowed welfare spending to spiral out of control, and backed down on even the most modest reforms when her backbenchers rebelled against a slowdown in the growth of spending. None of those were part of her “legacy” or can be blamed on “global events”. They were her own choices. Even now, she could cut spending if she wanted to. Instead, Reeves is paving the way for the most dramatic betrayal in recent British political history. Only eighteen months ago, she campaigned as the “Iron Chancellor” who would control public finances and who would never contemplate any rises in the three main taxes. It was a clear contract with the electorate. An increase in income tax will do huge damage to the already fragile state of the economy. Demand will suffer, both as pay packets shrink, and as people expect more rises down the line. Investment will evaporate. It probably won’t even do much to lower borrowing costs, as Labour’s support collapses in the polls. And yet, the real damage will be to trust in the political system. Labour has recklessly broken its promises on taxation – and the voters will rightly never forgive the party.