Rachel Reeves: 'I think that we will have to increase taxes'

By Jacob Paul (with Emily Maitlis and Lewis Goodalll)

In an exclusive interview with The News Agents, the Chancellor said she will need to raise taxes in October to plug a £22billion fiscal black hole she claimed was left behind by the Tories.

In brief…

• Rachel Reeves is seething at former chancellor Jeremy Hunt for allegedly lying about the state of the country's finances
• She says she will likely raise taxes and make difficult spending cuts to plug a £22 billion fiscal black hole
• Reeves denies being an “austerity chancellor”.

Chancellor Rachel Reeves tells The News Agents: "I think we will have to increase taxes"

Rachel Reeves is “angry” with the last Conservative government.

Particularly Jeremy Hunt, the former Chancellor, for she says “deliberately lying” about the state of the country’s finances and allegedly keeping secret a £22 billion fiscal black hole.  Hunt has strongly denied these claims.

Reeves is demanding an apology. She says she will have to make “difficult decisions” in the coming months because of Hunt and the Tories.

This is what she told the News Agents a day after making these explosive claims in the House of Commons.

Reeves told Emily Matilis and Jon Sopel in an interview from the Treasury: “We were in the House of Commons yesterday for two hours and didn't hear a single apology.”

She added: “I will fix the mess that we've inherited. But am I angry about it? Yes, I am because it was covered up during the election campaign.

“Promises were made with no money behind them. I will never treat people with such disrespect.”

What are her solutions? Here’s what she told Emily and Jon.

Tax rises

“I think that we will have to increase taxes in the budget”, Reeves told The News Agents.

Labour made clear in its manifesto it would not raise National Insurance, income tax or VAT.

Reeves said Labour will stick to its commitments, but refused to clarify which taxes would rise in order to plug the fiscal gap.

Could it be “inheritance tax, pension reform, capital gains, capital gains tax?”, Jon asked.

But Reeves told Jon she is not going to “start to write a budget” now, instead saying this will be revealed on 30 October.

Spending cuts

Reeves admits that she will have to make “difficult decisions” to plug the fiscal gap and to put “public spending back on a firm footing”.

One such move is the scrapping of Labour’s planned cap on social care, which the party promised just six weeks ago.

“You’re sounding like an austerity chancellor”, Emily put to Reeves.

Emily added: “You're cancelling things that you've said are tragic that you care passionately about. You're embodying the austerity chancellorship of George Osborne right now.” It comes after Reeves announced that Labour’s planned cap on social care would be scrapped.

Reeves told Maitlis this is “not a return to austerity”, but it is “getting a grip of public services”.

She added: “There is nothing progressive about losing control of the economy, because we saw what happened when the previous government lost control of the economy.

“And it was ordinary working people on low and middle incomes, who lost out when mortgage rates and rents spiralled. I'm not going to play fast and loose with the public finances.”

Axed Tory plans

“The previous government was not getting good value for money, they made terrible decisions”, says Reeves.

Now,  she has put an axe to a number of plans left behind by the last government.

That includes the Rwanda scheme, the plan which saw asylum seekers flown to the African nation as it was deemed a “safe country”.

“We’re not going to spend any more money on it. There will be no more checks handed to Rwanda”, Reeves told The News Agents.

Listen to the latest episode of The News Agents here: The chancellor on tax rises, austerity and urinals.

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