“We are never going to need a Budget like this again,” according to chancellor Rachel Reeves who said she would not increase taxes again before the end of this parliament cycle.
Appearing in front of the Treasury committee this week (November 6), Reeves gave evidence on the Budget where she made £40bn worth of tax hikes.
She said: “This was a Budget to reset, to draw a line under the last Budget where the OBR described the spending plans being worse than fiction. We draw a line under that now, there has been a reset.
“It means our public finances are now on a firm footing, and the trajectory of public spending is much more honest. So we're never going to need to do a Budget like this again. This was a once in a parliament reset, so that we start on the right foot,”
Reeves told the committee the government had “set the envelope” for spending for this parliament.
“We are not going to be coming back with more tax increases or more borrowing. We now need to live within the means that we have set ourselves,” she added.
One member of the committee asked Reeves how she was going to manage the concerns of people who are investing in the UK, given the tax changes she introduced last week, and asked whether there was a limit on how high taxes can go.
“I am not going to write five years worth of Budgets. It would be naive of me to try,” she replied.
In terms of what she would say to business, Reeves noted that the government’s corporate tax roadmap had been widely welcomed by business.
“We had to raise money in the Budget last week, we have done it in a balanced way. Balanced in terms of what we’ve done on carried interest and capital gains tax as well,” she added.
Reeves said she wanted to give businesses, families and markets confidence that the government now had public finances on a “firm footing”.
A committee member probed Reeves as to why she was keeping public investment flat when it would be a “missed opportunity” to increase it.
She said: “The profile that we inherited for public investment from 2.5 per cent of GDP in the current year down to 1.7 per cent by the end of the forecast period. That would be a real terms cut of a third in public sector net investment during the course of this parliament.
“That would have had a profound impact on our growth potential as a country and I didn't think that was a sensible path, because we've got massive opportunities as a country to invest in digital, energy and housing infrastructure. Plus a desperate need, as we all know, to rebuild our schools and our hospitals.
“So we've taken public sector investment back to that two and a half percent of GDP average over the forecast period, that's £100bn of additional capital investment that wouldn't have happened under the previous government”
