CHANCELLOR John Healey refused to rule out fresh tax rises in next month’s Budget despite being repeatedly pressed to reassure squeezed families and businesses.
He was asked multiple times whether he could promise not to pile on more tax on October 28 but insisted he would not “speculate” before the statement.
It comes as economists said more than half of the Government’s £23.6billion Budget headroom has already been eaten up by soaring borrowing costs.
Mr Healey vowed to rebuild a buffer in the public finances, saying he and Andy Burnham were “in lockstep” on balancing the books and meeting the fiscal rules.
But asked directly whether households and firms could be spared further rises, he said: “You were trying to take me onto questions of tax, questions that are part of anticipating the Budget I will deliver on Oct 28.
“And I say to you: look, if I respond to speculation now, that will only fuel more speculation. And it’s quite right, and every Chancellor will say, that’s for the Budget. And I’ll set out my plans and the future route for the Government, for this country, at that Budget.”
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Pressed again on whether increases could be on the same scale as Rachel Reeves’ previous tax-raising Budgets, he said Labour would stick to its 2024 manifesto promises.
But he added: “I’m the Chancellor, less than two months ahead of a Budget. I’m not going to speculate on questions of tax.”
Labour promised at the election not to raise income tax, National Insurance or VAT for “working people”, leaving other levies open to change.
His comments came after ten-year government borrowing costs climbed again to around 5.16 per cent, piling further pressure on the Treasury.
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Economists estimate higher interest rates and bond yields could add around £12billion to debt costs by 2029-30.
Mr Healey blamed much of Britain’s borrowing squeeze on Liz Truss, claiming the country was still paying a “Truss penalty” four years after her disastrous mini-Budget.
He said UK debt costs had historically been around the G7 average until her plans “crashed the economy and collapsed confidence in Britain’s fiscal strength”.
But he warned the Government must be “honest about the need to control government spending”, saying £1 in every £10 spent by Whitehall now goes on debt interest.
Speaking in a vast factory that forms part of the Manufacturing Technology Centre in Coventry, he said: “Fiscal discipling was my first priority as Chancellor.
“It underwrites every promise this government makes. The Prime Minister and I are in lockstep in our commitment to meeting the fiscal rules at the upcoming Budget.
“To balancing the books with a buffer to protect against uncertainty.”
Mr Healey also pledged to make Britain “growth Britain again”.
He announced £150million for fast-growing northern firms, plans to double the number of billion-dollar “unicorn” companies and a 25 per cent cut in the burden of business regulation by the end of the Parliament.
Councils and mayors will also be allowed to keep more business rates and receive a share of local income tax from 2028 under a new devolution push.
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And reforms aimed at stopping legal challenges delaying major infrastructure projects will be widened as Mr Healey promised to “take an axe” to red tape.
He also vowed to tackle the nearly one million young people not in work, education or training, calling getting them off benefits a “moral duty” and a “fiscal duty”.
The pre-Budget charade of whether the Chancellor wil raise taxes at the Budget
By RYAN SABEY, Deputy Political Editor and Economics Editor
We are now into the pre-Budget charade of whether the Chancellor will raise taxes at the Budget.
Questions backs and forth in the hope of getting a straight answer on whether us Brits will be further hit in the pocket.
The signs aren’t looking good.
The on-going Iran war, sluggish growth and rising borrowing costs are eating away at John Healey’s financial cushion.
And today when the Chancellor was asked about tax rises he didn’t rule them out.
His stock phrase for the next two months will be that he isn’t writing his Budget now.
But we did learn that he’s putting enormous emphasis on growth – despite it being dire in recent years.
But in a sign to the money markets, he did declare that the government needs to be more honest about public spending.
If ever there was a warning shot to Cabinet colleagues, that was it.
You could also sense his frustration at the costs business had taken on since Labour came to power.
He said it was time to draw a line on what has come before.
He’s gambling on growth to drive the economy.
I’m just fearful of what odds he may get on that from the bookies.