Gabrielle Wilde
Guest Reporter
The Chancellor has said businesses will need to decide whether they pass on the costs of the government’s tax rises with lower profits or by making efficiency gains.
Rachel Reeves also admitted that the rise in employer NIC may mean ‘slightly lower wage growth’ in some workplaces.
Speaking to GB News Political Editor Christopher Hope, Rachel Reeves said: “This role has existed now for 800 years, and never a woman has done it and to send her a dispatch box, and I hope, send a signal to young women and girls that there should be no ceiling on their ambitions, to smash that glass ceiling, it’s a big deal and I’m proud to have done it.
“I've always wanted to be Chancellor of the Exchequer. I think that everyone knows that. I started my career as an economist at the Bank of England. I worked in the private sector in financial services after that. This is the job that I've always wanted to do and it's great to finally be here, even in quite challenging circumstances.
“Well, we were clear in our manifesto the key taxes that working people pay, income tax and National Insurance and VAT, we wouldn't increase and we haven't increased income tax on working people.
“We have increased national insurance on business, and I do recognise that that will have an impact on people right across the economy. But we faced a situation where there was a big black hole in the public finances, and I made a commitment.
“The number one commitment was to bring stability back after the chaos and the instability we've experienced the last few years, and that meant having to increase taxes to fill that black hole, to put our public finances back on a firm footing.
“It's so important to do that, otherwise, you have what we've had in the last few years, which is volatility in financial markets and playing fast and loose in the public finances. It is in the end, working people who pay the price for that.
“The Office of Budget Responsibility forecast that real household disposable income is going to increase by an average of 0.5% a year through this parliament, and that compares to the last parliament, where living standards stagnated.
“So it's a world away from the stagnant living standards, real terms increases and what families have in their bank accounts and in their pockets.
“But do I want to go further and faster and better improve the living standards of working people? Absolutely. It’s why we hosted, just two weeks ago, the first International Investment Summit of this government, where £63.5 billion of investment by the private sector was unlocked. And that was great news, because that will create good jobs paying decent wages all across the country. And I want to see more of that.
“I think the most important measure is a real household disposable income, because that is what people have in their pockets after taxes. And the OBR say that will go up.
“Do we want to do more to grow the economy and improve living standards? Absolutely. We're less than four months into this Labour government. We made a start. The budget yesterday brings back the economic and fiscal stability that our country has lacked for a long time now, and the forecasts yesterday show that living standards are increasing after the stagnation in the last parliament.
“This is a one off budget. It is to wipe the slate clean and fix the foundations after the black hole we were left by the Conservatives. But we're not going to need to come back in another budget and do anything like this again. We have now taken the action to get our public finances on a stable path.
“We've set the spending envelope for the rest of this Parliament so we don't need to come back for more. And indeed, we've moved to annual budgets, rather than having them twice a year, so families and businesses can have confidence we're not going to come back and ask for more money in the spring like the Conservatives kept doing.
“Well, look, it's up to businesses in the end how they pass on the National Insurance increase, productivity gains, efficiency gains, slightly lower profits.
“It may mean in some workplaces, a slightly lower wage growth. But the Office of Budget Responsibility, when they look at the package as a whole, say that real household disposable incomes are going to start rising again after the stagnation that we saw in the last parliament.
“Let me just also say this, because for the smallest businesses, the 865,000 smallest businesses in our country, they will pay no national insurance contributions, because we've made a carve out to ensure that they are not affected by these changes. And indeed will pay less no national insurance.
“What the OBR says is that interest rates will come down during the course of this parliament. Now those are decisions for the independent Bank of England. And I used to be an economist there, I'm not going to second guess their decisions. It’s right that they make those independent decisions.
“Over the course of the forecast, [interest rates] fall, but those are decisions for the independent Bank of England. I respect those independent economic institutions who hold our feet to the fire and make sure that we have good economic policy making when they are properly respected.
“We published yesterday a line by line account, and there are hundreds of things in there. The Asylum bill is a big part of it, as subsidies, additional subsidies given to privatised rail companies, is another part of it. So a number of things go into it.
“But yesterday, we published a line by line account, because I do want to be an open and honest Chancellor that puts all the information out there and then people can judge us on our decisions.
“Whis year, the basic state pension, the new state pension is worth £900 more than it was no this winter. It will go up by a further £475 next year, and the pension credit threshold will also increase, so that more people will be entitled to it. And that's worth much more than the winter fuel payment that was being withdrawn, except for people on pension credit. And that is really important, because the poorest pensions will continue to receive winter fuel payments.
“If you own a farm or land, you have an additional £1 million inheritance tax than anyone else does. So already they have additional land that they can pass on without paying any inheritance tax.
“And indeed, 73% of farms last year did not pay any would not pay any inheritance tax at all, even after our changes. And after that next million pounds, there is a 50% discount on inheritance tax compared to what everybody else will pay.
“And you can pay that inheritance tax over a 10 year period in a way that no one else is able to. So I think we've got the right balance there.
“We did need to raise taxes to fill the black hole, to put our public finances on a stable footing. We did that yesterday, and people can now be confident that we will be able to live within our means.
“We have got a commitment from the National Health Service to meet a 2% efficiency and productivity target this year and next year too. And we also have a commitment from the NHS that this will deliver the 40,000 additional appointments every single week in the NHS to reduce those waiting lists from where they are now at 7.6 million.
“I was at a hospital today, Coventry and Warwickshire hospital, with the Prime Minister talking to staff there about the differences this will make and the number of additional patients they will be able to treat.
“So your viewers who are on those hospital waiting lists and have more confidence that they're going to get to the front of the queue sooner than they would have otherwise.”
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Rachel Reeves also admitted that the rise in employer NIC may mean ‘slightly lower wage growth’ in some workplaces.
Speaking to GB News Political Editor Christopher Hope, Rachel Reeves said: “This role has existed now for 800 years, and never a woman has done it and to send her a dispatch box, and I hope, send a signal to young women and girls that there should be no ceiling on their ambitions, to smash that glass ceiling, it’s a big deal and I’m proud to have done it.
“I've always wanted to be Chancellor of the Exchequer. I think that everyone knows that. I started my career as an economist at the Bank of England. I worked in the private sector in financial services after that. This is the job that I've always wanted to do and it's great to finally be here, even in quite challenging circumstances.
“Well, we were clear in our manifesto the key taxes that working people pay, income tax and National Insurance and VAT, we wouldn't increase and we haven't increased income tax on working people.
“We have increased national insurance on business, and I do recognise that that will have an impact on people right across the economy. But we faced a situation where there was a big black hole in the public finances, and I made a commitment.
“The number one commitment was to bring stability back after the chaos and the instability we've experienced the last few years, and that meant having to increase taxes to fill that black hole, to put our public finances back on a firm footing.
“It's so important to do that, otherwise, you have what we've had in the last few years, which is volatility in financial markets and playing fast and loose in the public finances. It is in the end, working people who pay the price for that.
“The Office of Budget Responsibility forecast that real household disposable income is going to increase by an average of 0.5% a year through this parliament, and that compares to the last parliament, where living standards stagnated.
“So it's a world away from the stagnant living standards, real terms increases and what families have in their bank accounts and in their pockets.
“But do I want to go further and faster and better improve the living standards of working people? Absolutely. It’s why we hosted, just two weeks ago, the first International Investment Summit of this government, where £63.5 billion of investment by the private sector was unlocked. And that was great news, because that will create good jobs paying decent wages all across the country. And I want to see more of that.
“I think the most important measure is a real household disposable income, because that is what people have in their pockets after taxes. And the OBR say that will go up.
“Do we want to do more to grow the economy and improve living standards? Absolutely. We're less than four months into this Labour government. We made a start. The budget yesterday brings back the economic and fiscal stability that our country has lacked for a long time now, and the forecasts yesterday show that living standards are increasing after the stagnation in the last parliament.
“This is a one off budget. It is to wipe the slate clean and fix the foundations after the black hole we were left by the Conservatives. But we're not going to need to come back in another budget and do anything like this again. We have now taken the action to get our public finances on a stable path.
“We've set the spending envelope for the rest of this Parliament so we don't need to come back for more. And indeed, we've moved to annual budgets, rather than having them twice a year, so families and businesses can have confidence we're not going to come back and ask for more money in the spring like the Conservatives kept doing.
“Well, look, it's up to businesses in the end how they pass on the National Insurance increase, productivity gains, efficiency gains, slightly lower profits.
“It may mean in some workplaces, a slightly lower wage growth. But the Office of Budget Responsibility, when they look at the package as a whole, say that real household disposable incomes are going to start rising again after the stagnation that we saw in the last parliament.
“Let me just also say this, because for the smallest businesses, the 865,000 smallest businesses in our country, they will pay no national insurance contributions, because we've made a carve out to ensure that they are not affected by these changes. And indeed will pay less no national insurance.
“What the OBR says is that interest rates will come down during the course of this parliament. Now those are decisions for the independent Bank of England. And I used to be an economist there, I'm not going to second guess their decisions. It’s right that they make those independent decisions.
“Over the course of the forecast, [interest rates] fall, but those are decisions for the independent Bank of England. I respect those independent economic institutions who hold our feet to the fire and make sure that we have good economic policy making when they are properly respected.
“We published yesterday a line by line account, and there are hundreds of things in there. The Asylum bill is a big part of it, as subsidies, additional subsidies given to privatised rail companies, is another part of it. So a number of things go into it.
“But yesterday, we published a line by line account, because I do want to be an open and honest Chancellor that puts all the information out there and then people can judge us on our decisions.
“Whis year, the basic state pension, the new state pension is worth £900 more than it was no this winter. It will go up by a further £475 next year, and the pension credit threshold will also increase, so that more people will be entitled to it. And that's worth much more than the winter fuel payment that was being withdrawn, except for people on pension credit. And that is really important, because the poorest pensions will continue to receive winter fuel payments.
“If you own a farm or land, you have an additional £1 million inheritance tax than anyone else does. So already they have additional land that they can pass on without paying any inheritance tax.
“And indeed, 73% of farms last year did not pay any would not pay any inheritance tax at all, even after our changes. And after that next million pounds, there is a 50% discount on inheritance tax compared to what everybody else will pay.
“And you can pay that inheritance tax over a 10 year period in a way that no one else is able to. So I think we've got the right balance there.
“We did need to raise taxes to fill the black hole, to put our public finances on a stable footing. We did that yesterday, and people can now be confident that we will be able to live within our means.
“We have got a commitment from the National Health Service to meet a 2% efficiency and productivity target this year and next year too. And we also have a commitment from the NHS that this will deliver the 40,000 additional appointments every single week in the NHS to reduce those waiting lists from where they are now at 7.6 million.
“I was at a hospital today, Coventry and Warwickshire hospital, with the Prime Minister talking to staff there about the differences this will make and the number of additional patients they will be able to treat.
“So your viewers who are on those hospital waiting lists and have more confidence that they're going to get to the front of the queue sooner than they would have otherwise.”
Find Out More...