Chancellor Rachel Reeves has staunchly defended her controversial £30 billion Budget tax increase, describing it as the 'absolute minimum' necessary despite allocating substantial funds to benefits.
The Chancellor's Justification
In a series of media appearances today, the Chancellor maintained that she 'had' to impose additional financial pressure on the country. This position comes despite the Treasury's independent watchdog identifying only a £6 billion hole in the public finances, significantly less than the amount being raised through new tax measures.
Ms Reeves faced questioning about whether her Budget package breached Labour's manifesto commitments. She responded by claiming the document only committed to not changing tax 'rates', thereby allowing for other fiscal adjustments through threshold changes.
Breaking Down the Tax Measures
The substantial fiscal raid announced yesterday includes an eye-watering £12.7 billion from extending the controversial tax threshold freeze for another three years. This extension will have significant consequences for British workers.
By the time these measures take full effect, approximately a quarter of the working population will be paying higher or top rate tax. This represents a dramatic increase from just 15 percent when the policy was first implemented in 2021.
The impact of threshold freezing becomes starkly apparent when considering what might have been. Had the higher rate threshold risen in line with inflation, it would have reached £70,370 by 2030. Instead, it will remain fixed at £50,270, creating a substantial fiscal drag effect.
Political Reactions and Consequences
The Conservative Party has condemned the Budget as being 'for benefits street', while Reform UK leader Nigel Farage criticised what he termed an 'assault on aspiration'.
Despite opposition criticism, the measures have received support from Labour MPs, with some ministers suggesting Ms Reeves has 'saved her skin' with her approach.
The overall tax burden is projected to reach a new peak as a proportion of GDP, reaching levels not seen in records that extend back more than three centuries.
Speaking to GB News this morning, Chancellor Reeves stated: 'I did have to increase taxes yesterday, but I've kept them to an absolute minimum on ordinary working people, freezing those thresholds for an additional three years from 2028.' She added, 'This Government are backing aspiration.'
