Labour MPs have accused the chancellor, Rachel Reeves, of making a “political choice” to embark on a programme of spending cuts.
The comments come as Reeves battles to meet her fiscal rules after a surge in borrowing costs, fuelling speculation of more cuts and/or tax rises.
Market moves have seen Reeves’ £10 billion of fiscal “headroom”, allowed for in the autumn budget, squeezed significantly. The chancellor has also appeared to rule out further tax rises, telling the Confederation of British Industry (CBI) conference in November last year that she would not be “coming back” for more.
The rate of employers’ national insurance contributions (NICs) was increased by 1.2 percentage points to 15 per cent at the autumn budget on 30 October. Reeves also announced that the level at which employers start paying NICs for each employee will fall from £9,100 to £5,000.
Chief secretary to the Treasury Darren Jones repeated Reeves’ commitment in the House of Commons last week. Conservative MP Wendy Morton asked the minister: “Will he stand by the chancellor’s comment that she won’t come back with more tax increases?”
“The answer is yes”, Jones replied.
An internal Treasury letter addressed to cabinet ministers, seen by the Daily Telegraph newspaper, admitted that “difficult” and “ruthless” decisions on budgets will be needed in the upcoming spending review.
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Responding to the Telegraph report, Labour MP Diane Abbott accused the government of committing to a programme of “austerity mark two”.
The mother of the House posted to X (formerly Twitter): “Treasury wants ‘ruthless’ cuts. So it is going to be austerity mark [two].”
“Mark one” austerity refers to the economic programme the Conservative-Liberal Democrat coalition government embarked on after 2010. George Osborne, chancellor from 2010 to 2016, oversaw a series of severe spending cuts and tax increases designed to cut back the UK state and reduce the national debt.
In a similar vein, Labour MP Kim Johnson — also of the party left — said: “Decisions to cut public spending on the vulnerable rather than tax wealth are not ‘difficult’. Choosing between heating and eating is.
“Austerity is a political choice. Where is the ‘change’ voters were promised?”
Reeves and prime minister Keir Starmer have repeatedly said they will not “return” to austerity, and announced £76 billion worth of new public spending at the autumn budget to that effect.
However recent market jitters have stoked speculation that the government could be forced to rethink their fiscal programme.
Following a speech on artificial intelligence on Monday morning, Starmer was asked four times if the financial situation meant further spending cuts might be needed.
He responded: “In terms of the ruthless approach when it comes to finances and spending, yes, we will be ruthless, as we have been ruthless in the decisions that we’ve taken so far. We’ve got clear fiscal rules, and we’re going to keep to those fiscal rules.”
Rachel Reeves is trapped
Josh Self is Editor of Politics.co.uk, follow him on Bluesky here.
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Source: Politics
