The chancellor has said the government will likely raise some taxes in October’s Budget after months of speculation about Labour’s stance on tax.
“I think we will have to increase taxes in the Budget,” Rachel Reeves told the News Agents podcast.
She was responding to a question about raising money following her claim on Monday that the previous government left a £22bn “hole” in the public finances.
Labour said repeatedly during the election campaign there would be no tax rises on “working people”, but the Conservatives had insisted Labour would increase them.
Speaking on the podcast, the chancellor was pushed on which taxes the government would raise.
Ms Reeves reiterrated that the government would not raise VAT, national insurance or income tax, as promised in Labour’s manifesto, but she did not rule out increasing inheritance tax, capital gains tax or pension reform.
The government has already announced details of how it will add value added tax (VAT) to private school fees at the standard rate of 20% to fund 6,500 new teachers in England.
“I’m not going to write a Budget or start to write a Budget on this podcast,” she said, adding that Labour wants to stick to “sensible” rules aimed at bringing the government’s longer-term debts down.
Ms Reeves’ comment comes after she scrapped a number of infrastructure projects, and announced the winter fuel allowance for pensions would be means-tested, as part of a series of measures aimed at addressing a shortfall in the public finances.
Labour and the Conservatives have been locked in a row over who is to blame for the lack of money in the public purse.
In response to Ms Reeves’ podcast interview, shadow chancellor Jeremy Hunt wrote on the social media platform X: “By refusing to take the difficult decisions needed, Rachel Reeves will do what she planned all along like every Labour chancellor in history – raise your taxes.”
On Monday, however, Ms Reeves had said the Conservatives’ “undisclosed” previous spending had forced her to axe the winter fuel allowance and make billions in other cuts.
Mr Hunt has denied this, saying the last government was “open” about public finances.
He insisted Labour’s decisions were a choice, criticising the government’s spending announcements since winning power.
The National Wealth Fund, GB Energy, and public sector pay rises added up to billions, he said.
“If you make those choices, you’re going to have to put up taxes and she should be upfront that those are her decisions,” he told BBC Breakfast on Tuesday.
The Institute for Fiscal Studies (IFS) has said some of Labour’s claims of hidden spending by the previous government “appear” to be correct.
This includes £6.4bn on the asylum system, including the Rwanda deportation scheme, a number that IFS director Paul Johnson called “huge”.
However, he added “half of [the] spending ‘hole’ is public pay over which government made a choice and where pressures were known”.
Labour has already confirmed some tax rises and the chancellor has previously alluded to “difficult decisions” needing to be made.
On Monday, Ms Reeves announced a windfall tax on oil and gas companies, in addition to the VAT on private school fees – both of which were manifesto commitments.
In response, Liberal Democrat Treasury spokesperson Sarah Olney urged Labour to go further and make large companies “pay their fair share” of tax.
