Rachel Reeves is blaming everyone else for her failures ahead of the upcoming Budget, Kemi Badenoch has said.
The Conservative Party leader said that the Chancellor’s pre-Budget speech, in which she readied the markets for more painful decisions, was a “masterclass in managed decline”.
In an unprecedented speech in Downing Street at 8.10am on Tuesday, the Chancellor indicated that she will increase taxes because everyone “will have to contribute” to improve Britain’s finances.
The Chancellor blamed global forces such as tariffs and “volatile” supply chains, as well as Liz Truss’ mini-Budget, for the nation’s current financial woes.
But Mrs Badenoch said that Ms Reeves was “blaming everybody except herself” and that her claims the Conservatives were responsible was “crazy”.
She told journalists on Tuesday: “It is utterly ridiculous to see Rachel Reeves stand there, blaming everybody except herself.
“Unemployment has risen every single month since Labour took office. But she wants to blame me for that? That’s crazy.”
She described the address as “one long wafflebomb” and a “laundry list of excuses” for what was to come.
The Conservative Party leader added: “We were told that this was the great moment when Labour would show they had a plan. Instead, what we got was a masterclass in managed decline.”
Meanwhile, Britain’s flagship stock index dropped sharply in early trading after the Chancellor suggested she would raise taxes.
The address was met with a mixed reception from backbenchers, with some urging the Chancellor to go even further with overhauling taxes.
One Labour MP told The Telegraph: “Right now, there’s no mandate for this, and worse, the Chancellor is presiding over a Government that’s still handing ever larger parts of our economy to corporate interests.
“That’s like running a bath with the plug out, you can pour as much in as you want, but it won’t fill up.”
Another said: “I don’t think she’s got the faintest idea what to do about growth. We’ll never get growth with the energy policies we’ve got.”
02:34pm
Thanks for joining
Thank you for joining The Telegraph’s live coverage of Rachel Reeves’ pre-Budget speech in which she readied the markets for more painful decisions. Here is a summary of what we learned:
02:10pm
Labour backbencher: Reeves hasn’t ‘the faintest idea on growth’
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Rachel Reeves has not got “the faintest idea what to do about growth”, a Labour MP has claimed.
Asked about the Chancellor’s speech, the critical backbencher said they had little faith in her ability to boost the economy without changing Labour’s energy policy.
They told The Telegraph: “I don’t think she’s got the faintest idea what to do about growth. We’ll never get growth with the energy policies we’ve got.
“No country ever has out competed or got better productivity when they’ve got energy prices way ahead of our industrial competitors.”
01:27pm
How Reeves lied about tax rises
In the run-up to last year’s general election, Rachel Reeves was adamant that she would not raise income tax, National Insurance or VAT.
The commitment was laid out in black and white in the Labour manifesto, which assured “working people” they would be shielded from further raids on their finances.
However, just 16 months later, it appears the party’s central pledge to the British public is about to come crashing down.
My colleagues Amy Gibbons and Ruby Cline have looked at the numerous times the Chancellor has promised not to raise taxes on the British people here.
01:06pm
Pictured: Tories’ latest attack ad with spoof lectern logo
12:57pm
Chancellor does not regret potential breaches of Labour’s manifesto tax pledge, says spokesman
Rachel Reeves does not regret potentially breaching Labour’s manifesto promises on tax, the Chancellor’s spokesman has said.
Asked whether she does, a spokesman for the Chancellor told reporters: “No. And again, I think she’s been asked this question previously.
“Those manifesto commitments were made because we recognised that working people had been asked to pay the price of 14 years of Conservative failure.”
Pressed on concerns that breaking manifesto promises could erode public trust, a Downing Street spokesman added: “Voters put their trust in Government to make tough decisions, not just popular ones.
“We’ll do whatever is necessary to protect families from high inflation and interest rates, protect our public services and guarantee the investment necessary for our economic future.”
12:50pm
Chancellor ‘is not a commentator of the country’s problems, she is the cause’, say Tories
Rachel Reeves is behaving like “a commentator on the country’s economy”, a shadow minister has said.
Richard Fuller, the shadow chief secretary to the Treasury, told the Commons: “After last year’s Budget, the Chancellor said she had wiped the slate clean but that wasn’t true Chancellor, was it?
“She said ‘I’m not coming back with more taxes’, but that wasn’t true Chancellor, was it? At the election the Chancellor said she would not raise taxes on working people, but that wasn’t true either was it Chancellor?
“When will the Chancellor learn the truth, that she isn’t a commentator on the country’s economic problems, she is the cause?”
12:40pm
Chancellor defines working person as one ‘who goes out every day to earn their income’
The definition of a working person is “somebody who goes out every day to earn their income”, Rachel Reeves has said.
The Government’s definition of a working person has come under scrutiny over the last year, as they promised at the general election they would “not increase taxes on working people”.
Asked again by the Conservatives to explain who a working person is according to the Government, the Chancellor said: “A working person is somebody who goes out every day to earn their income.
“They rely on prices that are affordable in the shops, low interest rates, taxes as low as possible but also public services that work for them like the NHS where waiting lists have come down by more than 200,000 already.”
12:34pm
Chancellor tells MPs she will build a ‘more prosperous Britain with an economy that works for everyone’
Chancellor tells MPs she will build a ‘more prosperous Britain with an economy that works for everyone’.
The upcoming Budget will work towards creating a “more prosperous Britain with an economy that works for everyone”, the Chancellor has told MPs.
Speaking in the Commons following her pre-Budget speech this morning, Ms Reeves said: “This Government was elected to break a cycle of decline.
“We’ve returned the public finances to a firm footing, invested in Britain and begun to rebuild our economy. But times remain challenging. Global uncertainty is dampening growth and increasing the cost of borrowing while inflation remains too high and productivity too low.”
She added: “In the face of these challenges, my task is clear. At the Budget later this month, I will continue to build the strong foundations to secure Britain’s future, to protect our NHS, to reduce our national debt and to improve the cost of living for a fairer, more prosperous Britain with an economy that works for everyone.”
12:28pm
Pre-Budget speech was ‘odd’, says senior economist
Rachel Reeves’s pre-Budget speech was “odd” and she was “wrong to pretend” that the challenges facing the economy were unforeseeable, a senior economist has said.
Paul Johnson, the former chief of the Institute for Fiscal Studies (IFS), said that the Chancellor “knew the risks when tax promises were made”.
He wrote on X: “Odd speech from chancellor. In one sense fair enough to blame last govt for problems. But wrong to pretend all utterly unexpected and couldn’t possibly have been predicted at election or budget last year.”
12:19pm
Labour MP urges Reeves not to pursue ‘piecemeal tax rises dressed up as fairness’
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Rachel Reeves should look at broader reforms of council tax and wealth tax rather than a “piecemeal rise dressed up as fairness”, a Labour MP has warned.
The MP told The Telegraph that the public “will stomach” an income tax rise but only if it is accompanied by a “clear, fair plan to rebuild the country and fix the systems that have been hollowed out”.
The Labour figure said: “Right now, there’s no mandate for this, and worse, the Chancellor is presiding over a Government that’s still handing ever larger parts of our economy to corporate interests.
“That’s like running a bath with the plug out, you can pour as much in as you want, but it won’t fill up.”
They added: “We need a proper national conversation about tax and ownership: reforming council tax, wealth taxes, looking at land value taxes, closing loopholes and windfall giveaways, and looking seriously at public ownership of key services.”
“What we should not have is a piecemeal rise dressed up as fairness, while the same extractive model keeps draining the country.”
12:13pm
Reeves ‘must not balance the books on the back of the working class’, says veteran Labour MP
11:54am
Analysis: Badenoch’s speech shows she is becoming ‘more nimble opposition leader’
Kemi Badenoch’s speech on cutting welfare, deliberately timed to take place just after Rachel Reeves’ warning over coming tax rises, will be seen as the latest indication the Tory leader is becoming a more nimble opposition leader, Nick Gutteridge writes.
Criticised at the start of her reign for being flat footed and failing to seize on Labour’s failures, she took her opportunity this morning to deliver a punchy address on her plans to get Britain working again.
There were cheers from assembled Tory MPs at the front of the room, including former leader Sir Iain Duncan Smith, as she launched a stout defence of building and enterprise and laughs when she repeatedly mocked the Chancellor over her house rental fiasco.
Ultimately there was no new policy from Ms Badenoch, who pointedly would not commit to reversing whatever tax rises Ms Reeves makes at next week’s budget.
But the speech may further quell Tory murmurings over her leadership, which have quietened following a strong conference showing and amid signs the party’s poll rating has stabilised, albeit at a lowly 17 per cent.
11:34am
Rachel Reeves’s speech ‘wasn’t pitch-rolling, it was pointless’, say Lib Dems
The Chancellor’s pre-Budget speech was “pointless”, the Liberal Democrats have said.
Daisy Cooper, the party’s Treasury spokesman, said: “This wasn’t pitch rolling, it was pointless.
“It’s clear that this Budget will be a bitter pill to swallow as the Government seems to have run out of excuses.
“The Government can’t keep punishing households, high streets and hospices while big banks, gambling companies and social media giants don’t pay their fair share.
“If Rachel Reeves really wants to unleash growth for British businesses, she needs to get a better deal with the EU. It’s the elephant in the room she refuses to face.”
11:20am
Do not attack pensioners’ living standards with income tax rise, campaigner urges Reeves
Dennis Reed, the director of Silver Voices, a body that champions the elderly, has raised concerns about the income tax raid, which could be coming.
Mr Reed said: “It is clear that the Chancellor is going to break her pledge not to raise income tax, but the pain is likely to be targeted at pensioners.
“Egged on by the anti-pensioner think tanks such as the Resolution Foundation, and their man in Government Torsten Bell MP, the Chancellor is seriously considering compensating ‘working people’ for any rises in the basic rate of income tax by cutting national insurance, which of course retired people do not pay.
“This would be seen as a direct and deliberate attack on the living standards of older people, the large majority of whom already pay some income tax.”
10:53am
Analysis: The Chancellor’s big three priorities
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The three priorities which the Chancellor named for her Budget were telling.
The first was avoiding inflation and creating the conditions for interest rate cuts. The Tories would no doubt have been rolling their eyes, given the inflation rate has nearly doubled under Labour.
But the choice offers clues about what could be coming. It is very unlikely Rachel Reeves will raise Value Added Tax, given this focus on lowering costs.
Indeed, she picked out two areas for action the other way: Energy and food prices. So expect measures to drive down both of those on 26 November. It has been floated that she could cut VAT on energy bills, which are up despite Labour’s election pledge to reduce them.
The second priority was no return to “austerity”. That sends a clear signal that while some pruning of spending is coming there will not be major new cuts to public services.
The third was keeping debt under control. The relevance here goes to the central choice that the Chancellor appears willing to make: Breaking tax promises to stabilise the public finances. Treasury sources have indicated Ms Reeves is determined to increase the amount of money kept back for sudden changes – the fiscal headroom – which explains this focus on debt.
10:48am
Kemi Badenoch fails to confirm if Tories would reverse any income tax increases by Reeves
Kemi Badenoch has failed to pledge that she would reverse any increases in income tax that Rachel Reeves brings in at the upcoming Budget.
The Tory leader said she wants to “see lower taxes” but said she did not know “how big the mess” they will inherit if they win the next election.
Asked if she can promise she would reverse any tax increases in the upcoming Budget, she said: “What people can tell from everything that I say that we are making sure we are going to be fiscally responsible”.
She added: “We need to make sure that we get our economy growing again. I have said that I want to see lower taxes. We talked about the taxes that we said we’ll reverse: the taxes on family businesses, taxes on family farms, VAT on private schools, scrapping the windfall tax, scrapping the carbon tax, that’s a lot of taxes that we’re already getting rid of.
“But every day she’s shrinking the size of the productive economy.”
10:37am
Reeves’ Budget is playing ‘bingo of all the lines she has been practising the last few years’
Kemi Badenoch said that Rachel Reeves will be “playing bingo” at her Budget “with all of the lines that she has been practising over the last few years”.
“It is utterly ridiculous to see Rachel Reeves stand there, blaming everybody except herself. Unemployment has risen every single month since Labour took office. But she wants to blame me for that? That’s crazy.”
“We need people who understand the economy, people who’ve worked in the private sector, people who’ve run a business. Rachel Reeves is going to come out playing bingo with all of the lines that she has been practising over the last few years.
“She doesn’t know what she’s doing. We need to get Britain working again. She should copy and paste. That’s the best that she can do right now. So she should take our ideas and run with it.”
10:29am
Badenoch: ‘When you want something, you get less of it’
Kemi Badenoch has said she will cut jobs taxes, business taxes and taxes on families.
She concluded her speech with the message: “When you tax something, you get less of it. That’s why we want lower taxes on jobs. More jobs.
“Want lower taxes on businesses. We want more businesses. We need lower taxes on taking a risk, lower taxes on buying a home, lower taxes on having a family. And we will get Britain working by rebuilding the contract between government and citizen.”
10:27am
Watch: Kemi Badenoch calls Government ‘hypocritical’
10:24am
‘You’re better off working for the Government than a business under Labour’
Kemi Badenoch has claimed that the Government has created an economy where “you’re better off working for the Government or the organisation that is taxing the business rather than the business itself”.
“This is the culture that Labour is creating. You’re better off spending more money than saving it. You’re better off on welfare than in work and if you do work, you’re better off working for the Government or the organisation that is taxing the business rather than the business itself.”
She added: “Just look at that definition of a working person they’ve been getting into knots over, getting smaller and smaller every day. First they got rid of farmers, then they got rid of business owners now anyone earning less than £46,000.
“By the time they’re finished, the only person left who counts as a working person will be someone on out of work benefits.”
10:21am
Badenoch: Labour has sent the message ‘don’t bother living within your means’
The Labour Government’s message is “don’t bother living within your means”, the Tory leader said.
Kemi Badenoch said: “The message this government has sent, don’t bother doing the right thing. Don’t bother living within your means, because the government doesn’t. Don’t bother putting money away to cover your bills or you’ll just end up paying for those that don’t.
“The budget is an opportunity for Rachel Reeves to fix this, to make savings and take the pressure off all of us.”
10:19am
Badenoch: We will offer £5,000 first jobs bonus to get young people working
Kemi Badenoch has announced that the Conservatives will offer a £5,000 “first jobs bonus” to encourage young people back into work.
The Tory leader told a press conference: “Each young person not in employment, in education or training, is costing the economy nearly £200,000. There are now a million of them… a million young people not in education, not in training, not working.
“Labour might have given up, but we haven’t. We will get them working, and we’ll give them a £5000 first jobs bonus.”
10:16am
Chancellor ‘blamed absolutely everyone else for her own choices’
The Chancellor “blamed absolutely everyone else for her own choices”, Kemi Badenoch said.
The Tory leader called Rachel Reeves’ speech “one long wafflebomb” and a “laundry list of excuses”.
She told the press conference: “She blamed absolutely everybody else for her own choices, her own decisions, her own failures.
“She claims she will focus on the priorities of the British public. Whose priority is it to pay more tax? It is basic economics that if you tax something, you get less of it.”
10:13am
Badenoch: Chancellor’s speech ‘masterclass in managed decline’
Kemi Badenoch has condemned Rachel Reeves’ pre-Budget speech as a “masterclass in managed decline”.
In a speech in London this morning, the Tory leader said: “This morning, we saw the extraordinary spectacle of a Chancellor just days before a budget rushed into a panicked speech, we were told that this was the great moment when Labour would show they had a plan.
“Instead, what we got was a masterclass in managed decline.”
09:55am
Kemi Badenoch to speak at 10am
Kemi Badenoch is expected to give a speech at 10am, in which she will set out the party’s plans to reform the welfare system.
The Tory leader is also expected to give her reaction to Rachel Reeves’ pre-Budget speech indicating that tax rises are to come in the Budget.
Stay with us as we bring Mrs Badenoch’s remarks to you live.
09:50am
Your verdict: Readers react to Rachel Reeves’ speech
09:46am
FTSE 100 sinks after Reeves speech
Britain’s flagship stock index dropped sharply in early trading after Rachel Reeves suggested she would raise taxes.
The FTSE 100 fell 1pc while the domestically focused FTSE 250 dropped 0.9pc as the Chancellor “we will all have to contribute” to Britain’s future and getting the national debt down.
Rachel Winter, partner at wealth manager Killik & Co, said: “UK equities are in negative territory following the Chancellor’s speech, suggesting a lack of confidence in the prospects of the UK economy.”
She added: “The pound has also weakened since yesterday, which is a further indication of a reluctance to hold UK assets.”
The Chancellor’s warning comes as investors turn wary about stock markets globally over concerns of an AI-fuelled bubble.
XTB analyst Kathleen Brook said Wall Street bosses had “put investors on notice for a correction in the next one to two years”.
She said: “It seems like the investment community has taken heed of this message, and European stocks are falling.”
09:41am
Trade unions boss: Chancellor should look at capital gains tax before income tax
Rachel Reeves should look at increasing capital gains tax before hiking income tax on higher earners, the head of the Trades Union Congress (TUC) has said.
Paul Nowak, the TUC general secretary, said the Government “must do much more to ensure that the wealthiest pay their fair share” before considering income tax increases.
“That includes looking at increasing capital gains tax, upping the tax on gambling companies and making the banks pay a little bit more after they cashed in on eye-watering profits.
“That’s how you deliver a fair and progressive tax system where those with the broadest shoulders contribute more.”
But he added: “The Chancellor is absolutely right to focus on improving the cost of living and rebuilding services, and to recognise the need to repair years of failure on infrastructure investment.
“That’s why this Budget must be ambitious for Britain. And it must deliver fair taxes to fund the public services that working people need. It’s time those with the broadest shoulders paid their fair share – whether it’s the wealthiest, banks or gambling companies.”
09:31am
Analysis: Significance in Reeves’ speech is in the nuance
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So much of the significance in pre-Budget comments by any Chancellor can be found in the nuance of the words and framing they select.
On this metric, Rachel Reeves’s press conference was packed with consequence even if she did not confirm any specific policy measure.
The burden of fixing the public finances must now be carried by “all” of the country and not just those with the broadest shoulders.
When asked about the importance of promises – translated: are you going to break the manifesto? – Ms Reeves talked about the need for “honesty” instead.
There was talk about popularity being less important than being right – indeed the Chancellor suggested she was willing to lose the next election to right the public finances when pressed by The Telegraph.
Ms Reeves also carefully laid the justification for a major tax rise by saying that other priorities, such as reducing the deficit, bringing down the cost of living and protecting the NHS, were more important.
The simple takeaway is that the Treasury is now projecting publicly and loudly that it is willing to rip up what was promised in the election last year on tax to improve the nation’s finances.
09:21am
‘If Rachel Reeves breaks her promise and hikes taxes again, she must go’ says shadow chancellor
Rachel Reeves must resign if she increases taxes at the upcoming Budget, the shadow chancellor has said.
Sir Mel Stride insisted that the Chancellor does not need to announce more tax increases if she “reduces government spending” including the welfare bill.
“This was an emergency speech from a Chancellor panicking about the speculation she has fuelled. But all Rachel Reeves has done is confirm the fears of households and businesses – that tax rises are coming. Rachel Reeves claimed today she had fixed the public finances last year.
“If that was true, she would not be rolling the pitch for more tax rises and broken promises.
“The reality is the Chancellor fiddled the fiscal rules so she could borrow hundreds of billions more and allow debt to rise every single year. Every time the numbers don’t add up, Reeves blames someone else. But this is about choices – and the Chancellor is refusing to take responsibility for her own poor decisions.”
He added: “My message is clear: if Rachel Reeves reduces government spending – including the welfare bill – she doesn’t need to raise taxes again. If Rachel Reeves breaks her promise and hikes taxes again, she must go.”
09:10am
Pictures: Rachel Reeves leaves Downing Street after pre-Budget speech
09:05am
Traders raise bets on rate cut after Reeves suggests tax rises
Rachel Reeves’s opening the door to manifesto-busting tax rises makes it more likely the Bank of England will cut interest rates this year, according to money markets.
Derivatives traders have raised the probability on a rate cut by the end of this year from 68pc to 72pc following the Chancellor’s speech in Downing Street. Traders are betting there is a 31pc chance of a rate cut at the Bank of England’s next meeting later this week.
Simon French, an economist at stockbroker Panmure Liberum, said Ms Reeves appeared to make “sensible” suggestions that she would raise taxes and increase the fiscal headroom in the Budget.
But he suggested these could “hit consumption growth hard”, forcing the Bank of England to act to support the economy.
He said: “I would suggest this all points to a further UK interest rate cut this quarter – question is whether it comes on Thursday, or next month.”
08:59am
‘There is no magic money tree’, Chancellor tells Labour MPs
The Chancellor appeared to issue a warning to her backbenchers that there is no “magic money tree” following about-turns on welfare reforms.
Rachel Reeves said it was “unfair” to blame the Parliamentary Labour Party for the supply-side review from the Office for Budget Responsibility which she said would be the “biggest piece of news” ahead of the Budget.
But asked if the about-turn on planned welfare reforms had caused her further economic problems, and about Labour MPs’ calls for the abolition of the two-child cap, she said: “All decisions have consequences, and if you spend more on one thing, there’s less money to spend on something else.
“I’ve always been really clear about that there isn’t a magic money tree for any type of spending, and any decisions to spend in one area will have consequences for other areas as well”.
08:54am
Analysis: Value of the pound falls to seven-month low
The value of the pound fell to a seven-month low as Rachel Reeves hinted at tax rises in the Budget.
The Chancellor suggested she could make a broad-based tax rise as she said: “If we are to build the future of Britain, we will all have to contribute to that effort.”
Sterling slipped by 0.3pc against the dollar to $1.31, its weakest level since April. It was down by 0.4pc against the euro to €1.137.
The Chancellor’s suggestions of tax rises has sent borrowing costs lower, which typically also weakens the pound as investors think they can get better returns for their money elsewhere.
08:53am
Pictured: Rachel Reeves delivers pre-Budget speech
08:51am
Borrowing costs drop as Reeves seeks to get debt ‘under control’
The cost of UK government borrowing has fallen at the fastest pace among major global economies after Rachel Reeves said Britain needed to tackle its mounting debt.
Borrowing costs fell as the Chancellor said: “The less we spend on debt interest, the more we can spend on the priorities of working people.”
The yield on 10-year UK gilts – the return the government promises to pay buyers of its debt – fell six basis points to 4.38pc, declining at a much faster rate than comparable economies such as Germany, France and the US.
Ms Reeves warned that the UK national debt has reached £2.6 trillion, equivalent to 94pc of GDP.
The Chancellor acknowledged that Britain has the highest borrowing costs of any G7 country, which meant one in every £10 was spent on debt interest.
She said she could not change the fact that government debt was sold on financial markets.
She said: “The more that we try to sell, the more that it will cost us.”
08:50am
Reeves: I’m ready to break the manifesto with income tax rises
Rachel Reeves has strongly indicated that she is ready to break the manifesto with increases to income tax.
The Chancellor did not announce any specific tax rises or spending commitments in her pre-Budget speech, but warned of the “challenges” facing Britain’s economy.
In a hint that tax rises are likely in the Budget, she said: “If we are to build the future of Britain together, we will all have to contribute to that effort. Each of us must do our bit for the security of our country and the brightness of its future.”
Asked about the manifesto promises not to raise income tax, National Insurance or VAT, she said: “As Chancellor, I have to face the world as it is not the world that I want it to be.
“And when challenges come our way, the only question is how to respond to them, not whether to respond or not. And as I respond at the Budget on the 26th November, my focus will be on getting NHS waiting lists down, getting the cost of living down, and also getting the national debt down.”
08:42am
Government must do what is right over ‘political expediency’, says Reeves
The Government will act in the national interest over “political expediency”, Rachel Reeves has said.
Asked by Ben Riley-Smith, The Telegraph’s Political Editor, if she was prepared to lose the next election as a result of breaking manifesto promises by raising tax, the Chancellor said she would do “the right things”.
“The problem of the last 14 years is that political expediency always came above the national interest, and that is why we are in the mess that we are in today.”
She added: “If you’re asking me, what comes first, national interest or political expediency, national interest every single time. And that’s the same for Keir Starmer too.”
08:38am
Chancellor does not rule out tax rises
Rachel Reeves has failed to rule out tax rises at the Budget later this month.
The Chancellor said that she would not be announcing specific policies ahead of the fiscal event in three weeks’ time, but said she wanted to set out the “challenges” facing Britain’s economy.
Responding to a question about whether the manifesto pledge not to raise income tax, National Insurance or VAT still stood, she replied: “I will set out the specific policy choices on the 26th November, and that’s the right thing to do, and we’re going through that process.”
08:35am
‘We will all have to contribute’ to fixing Britain’s economy, warns Reeves
Everybody “will have to contribute” to fixing Britain’s economy, Rachel Reeves has said.
The Chancellor said that there is a “reward for getting these decisions right” but warned that “each of us must do our bit”.
Concluding her speech, she said: “If we are to build the future of Britain together, we will all have to contribute to that effort. Each of us must do our bit for the security of our country and the brightness of its future.
“There is a reward for getting these decisions right, to build more resilient public finances with the headroom to withstand global turbulence, giving business the confidence to invest and leaving government freer to act when the situation calls for it, to continue to invest in our infrastructure and our industry, to build a stronger economy and to get the cost of borrowing down.”
08:32am
Rachel Reeves confirms no tax announcements ahead of Budget
Rachel Reeves has confirmed that she will not be making any tax announcements this morning.
The Chancellor was not expected to announce any specific tax or spend measures, as it is convention that such announcements are only made in the Commons at the Budget.
She told journalists: “I will set out the individual policies at the budget on the 26th. That’s not what today is about, today is about setting the context for that Budget.”
She added: “What I want people to understand as we go into that Budget is the circumstances which we face, and that is circumstances of great opportunities for our country, for the reasons that I set out, but also big challenges and national debt continues to rise.”
08:29am
Reeves: I won’t always do what is popular
The Chancellor has said she will “not always do what is popular”.
Rachel Reeves warned: “When I was appointed Chancellor, people put their faith in me to take our country forward, not to be swayed by political convenience, not to always do what is popular.
“I will continue to deliver on the priorities of the British people, cutting NHS waiting lists, cutting the national debt and cutting the cost of living. And in the context of the long-term challenges on our productivity and heightened global uncertainty, any chancellor of any party would be standing here today facing the choices that I face. The difference is in the priorities and the values that will guide those choices.”
She added: “Mine will be a budget for growth with fairness at its heart and a budget that supports businesses to create jobs and to innovate.”
08:26am
Chancellor: Reform won’t find more savings than I can
Reform UK would not be able to find more savings if they were in power, Rachel Reeves has said.
The Chancellor took a swipe at both Reform and the Conservatives over claims that she could go further in cutting public spending.
She told a press conference: “At the spending review, I announced £14 billion of efficiencies per year to be delivered by 2029, cutting government spend on consultancies, getting rid of bureaucratic quangos and regulators and driving efficiency through AI and digital technologies.
“But I know that there is more to do in the Budget and beyond, I will continue to drive for more productive and more efficient public services right across government, making savings and rooting out waste wherever I find it.”
She added: “Now, my opponents will tell you that they could do more. Reform UK promise savings from our public services, and yet in Kent County Council and councils they run across Britain, apparently they can’t find a single penny, and instead going to increase council tax for more than 2 million people.”
08:23am
Reeves blames Tories for ‘irresponsible’ choices and rising Government debt
Rachel Reeves has set out the extent of national debt and said it would be “irresponsible” to offer easy answers.
“I understand the urge for easy answers. Politicians of recent years have become addicted to shelling out for short term sticking plaster solutions rather than making long term economic plans, they were irresponsible.”
She added: “Those who continue to push for easy answers are irresponsible. Now, the UK’s national debt now stands at £2.6 trillion, equivalent to 94pc of GDP. Before the mini-Budget, our borrowing costs were in the middle of the pack compared to other advanced economies.
“But now we have the highest borrowing costs of any G7 country today, one in every £10 of taxpayers’ money.”
08:19am
Reeves: I am not satisfied with Britain’s growth
Rachel Reeves has said that she is not satisfied with Britain’s growth rate.
“This isn’t about relitigating old choices. It’s about being honest with the people about the consequences that those choices have had. It is my job to deal with the world as we find it, not the world that I might wish it to be, to commentate or to speculate.”
She added: “I know real progress takes time. Our growth was the fastest in the G7 in the first half of this year. I don’t expect anyone to be satisfied with growth of 1pc. I’m not, and I know that there is more to do.”
08:16am
Reeves indicates Government will press ahead with welfare reforms
The Chancellor has indicated that the Government will press ahead with attempts to reform the welfare system, despite the defeat inflicted by backbench MPs last year.
Rachel Reeves said: “The Prime Minister, the Secretary of Work and Pensions and this whole Government, are committed to reforming our welfare state. So that is not a system that counts the costs of failure, but one that invests in success and protects those who need it most.”
She added: “There is nothing progressive about refusing to reform a system that is leaving one in eight young people out of education or employment.
“So we have begun the job of creating a system that protects people who cannot work and empowers those who can.”
08:14am
‘I fixed the foundations last year, but the world has thrown even more challenges our way’
The Chancellor said that she “fixed the foundations” of the economy at her last Budget, but that since then “the world has thrown even more challenges our way”.
Rachel Reeves said: “At the Budget last year, I fixed the foundations, dealing with the aftermath of Liz Truss’s disastrous mini-budget and the £22bn black hole in the public finances left by the previous government. I put our public finances back on a firm footing, provided an urgent cash injection into our faltering public services and began rebuilding our economy.”
She added: “But since that Budget, the world has thrown even more challenges our way. The continual threat of tariffs has dragged on global confidence, deterring business investments and dampening growth.
“Inflation has been too slow to come down, as supply chains continue to be volatile, meaning the costs of everyday essentials remain too high and the cost of government borrowing has increased.”
08:12am
Chancellor: I want people to understand the circumstances we are facing
Rachel Reeves has said that she wants the public to “understand the circumstances we are facing” and “the principles guiding my choices” as she begins her speech.
She told journalists: “There has been a lot speculation about the choices that I will make, I understand that. These are important choices that will shape the future of our country for years to come. I want people to understand the circumstances we are facing, the principles guiding my choices, and why I believe they will be the right choices.”
08:08am
Rachel Reeves: Budget ‘will focus squarely on priorities of British people’
08:05am
Labour MP warns Reeves breaching manifesto would be ‘very damaging’
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A Labour MP has warned Rachel Reeves that it would be “very damaging” to breach the Labour manifesto when trust in politics is “at an all time low”.
Fears are mounting that the Chancellor could break her promise not to raise income tax as she battles to fill a black hole in the public finances.
The Labour backbencher warned that such a move would actually “take money out of the economy”, undermining the Government’s push for growth.
Asked for their message ahead of Ms Reeves’s pre-Budget speech on Tuesday, they told The Telegraph: “With trust in politics at an all time low, breaking the manifesto will be very damaging.
“Increasing tax will take money out of the economy and is therefore deflationary, thereby working against the Government’s wish to increase economic growth.”
07:55am
Raising taxes would help Reeves soothe the bond market vigilantes
One of the key reasons Rachel Reeves is preparing to break a Labour manifesto pledge on income tax is the huge pressure she has faced from bond markets.
Long-term government borrowing costs have been pushed to their highest levels since 1998 this year as investors expressed doubts about the sustainability of the public finances.
One of the main reasons for this has been the “wafer thin” margins for error left by the Chancellor during her Budget last year.
Ms Reeves left headroom of just £9.9bn, which was wiped out by an increase in borrowing costs in January, forcing her to promise spending cuts in her Spring Statement. But this backfired when the Government failed to pass its welfare reforms in the summer, further pushing up borrowing costs as bond market vigilantes feared Britain’s mounting debt pile might start rising at too fast a pace.
The Chancellor needs to find a way to break this cycle and one way to do so would be to leave herself more fiscal headroom. Many economists say she might seek to leave a margin of as much as £20bn.
This would ease concerns that movements in bond markets could derail the Government’s plans and force the Chancellor to seek even further tax rises or, worse still, borrow more. But while it may calm the markets, breaking a manifesto pledge carries huge political risks.
07:45am
What did Labour promise on tax?
Rachel Reeves’s rare press conference just weeks before the Budget has fuelled speculation that Labour’s manifesto promise on tax is in jeopardy.
In the 2024 election manifesto, the party pledged: “We will ensure taxes on working people are kept as low as possible.
“Labour will not increase taxes on working people, which is why we will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT.”
Sir Keir Starmer had already stoked fears that the manifesto promise could be breached after he failed to repeat it at Prime Minister’s Questions last Wednesday.
07:35am
Analysis: What to expect from Rachel Reeves
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The 135-word excerpt from the speech circulated by No 11 had some coded nods to what might be coming.
Part of the Reeves excerpt read: “Later this month, I will deliver my second Budget as Chancellor.
“At that Budget, I will make the choices necessary to deliver strong foundations for our economy – for this year, and years to come.
“It will be a budget led by this government’s values, of fairness and opportunity and focused squarely on the priorities of the British people:”
Her mention of taking “necessary” steps and putting the public finances on a more stable footing for “years to come” appears to be pitch-rolling for tax rises.
The comment about “fairness” also chimes with other indications from the Treasury that the wealthy are in line for tax increases in this Budget.
07:27am
Putting up income tax ‘looks like best option’ for Reeves, says think tank boss
Increasing income tax “looks like the best option” for the Chancellor at the Budget given Britain’s difficult economic situation, the head of the Resolution Foundation has said.
Ruth Curtice, the boss of the influential economic think tank, said she believed Rachel Reeves will need to raise at least £25 billion in tax, which is likely to involve breaching manifesto promises.
She told the BBC Radio 4 Today Programme: “We think the Chancellor will need to raise at least £25 billion in tax not least because of that large productivity downgrade from the OBR [Office for Budget Responsibility] that we are all expecting.”
She added: “If we add into income tax, VAT or National Insurance, the fact she’s also promised not to raise corporation tax, that’s three quarters of the tax base, so that’s a very constraining commitment.
“On the other hand, she’s got to navigate the very difficult economic position that we are currently in and that means she needs a Budget that minimises the impact on growth, which bears down on inflation and prices, and that reassures financial markets.
“And when you think about navigating that very difficult economic position, putting up income tax looks like the best option and it may simply not be possible for her to find enough options that fit that necessity without looking at things that touch the manifesto.”
07:18am
What time is the Chancellor’s speech?
Rachel Reeves is expected to deliver her highly unusual pre-Budget speech at around 8:10am today in No 11 Downing Street, the Chancellor’s residence.
Hacks will very shortly be gathering on Downing Street ahead of being able to ask questions of the Chancellor after her remarks.
It is highly likely that she will face several questions about whether Labour’s commitment not to raise National Insurance, the basic, higher, or additional rates of Income Tax, or VAT still stands.
07:09am
Graph: Chancellor has borrowed £100bn since April
06:51am
Analysis: Reeves hopes to shape Budget narrative
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Rachel Reeves’s decision to address reporters – and, watching on, the nation – despite there still being three weeks before the Budget suggests that she wants to start shaping the narrative.
It is unusual for a Chancellor to break cover from the four walls of the Treasury and address the public about decisions that remain tightly concealed this far in advance.
The word from those briefed on the speech is that it will be about making the big arguments behind her thinking rather than revealing any specific policy announcement.
So if you are hoping to tune in to see whether your council tax bill will go up or the capital gains tax due on any stocks and shares will be raised you may be disappointed.
06:44am
Reeves preparing to break manifesto pledge at Budget
Rachel Reeves will indicate she is prepared to break Labour’s manifesto promise not to raise income tax.
In a rare pre-Budget press conference on Tuesday, the Chancellor will insist she will take the “necessary” steps to right public finances for “years to come”.
The Treasury has not knocked down speculation that an increase in income tax rates – potentially by as much as 2p – is being considered in her Budget on Nov 26 to fill a financial black hole.
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