Reeves Stands Firm: No More Tax Hikes as She Champions the Budget!
Getty Images In a bold move, Chancellor Rachel Reeves stood before business leaders, making it crystal clear: “I’m not returning with more borrowing or higher taxes.” With this declaration, she defended her recent budgetary choices, which raised taxes on businesses.
Addressing the Confederation of British Industry (CBI) conference, Reeves acknowledged the “significant feedback” regarding her fiscal strategies but noted a surprising lack of alternative proposals.
Her remarks came after the CEO of the iconic biscuit maker McVitie’s expressed concerns about the challenges of investing in the UK, following the Chancellor’s announcements.
In her inaugural budget last month, Reeves unveiled nearly £70 billion in increased public spending, with over half of that funding sourced from elevated taxes.
Businesses are now facing the brunt of these tax hikes, as the Chancellor has decided to boost the National Insurance rate paid by employers and lower the threshold at which it kicks in.
The backlash has been palpable, with firms warning that the combination of higher taxes in April, increased minimum wages, and rising business rates could adversely affect jobs and wages, potentially jeopardizing the government’s ambitions for economic growth.
Despite this criticism, Reeves asserted that her budget provides the “stability and platform we need to move forward.” When questioned about the possibility of further tax increases on businesses, she confidently replied, “I faced a problem and tackled it… We’ve restored our public finances to a solid foundation, while setting budgets for public services for the entire duration of this Parliament.”
“Public services must learn to operate within their means because I’m resolute: no more borrowing or higher taxes.”
While labor reforms and minimum wage increases have drawn praise from unions, many business leaders argue they are being overwhelmed by the simultaneous introduction of multiple changes, with calls for these changes to be implemented gradually.
During her speech at the conference, Rain Newton-Smith, the CBI’s chief executive, emphasized, “We cannot continue to impose tax rises strictly on businesses.” She highlighted that these policy changes are pushing companies into an increasingly tough trading environment.
“When profits take a hit, competitiveness suffers, leading to diminished investment and stunted growth,” she stated.
Newton-Smith referenced a recent survey indicating that nearly two-thirds of 185 responding companies fear the Budget will adversely affect UK investment.
Salman Amin of McVitie’s echoed these sentiments, noting that while much of his past decade’s investment has been in the UK, the rationale for continued investment is becoming increasingly elusive. “In our quest for growth, we seem to be neglecting the industries that have long been the backbone of Britain,” he lamented.
‘Milked as the Cash Cow’
Meanwhile, Rupert Soames, CBI chairman, remarked that the Budget has made hiring young, part-time, and low-wage employees “much costlier.” Following Reeves’ address, he stated, “Many elements of the Budget are advantageous, such as the corporate tax roadmap.”
“Yet, there’s no denying that businesses have been treated like a cash cow,” he added.
Just last week, major retailers, including Tesco and Amazon, expressed their concerns to the Chancellor regarding the impacts of tax alterations.
Firms like Sainsbury’s and Marks & Spencer have warned of significant cost hikes that could force them to increase customer prices.
However, others argue that asking multimillion-dollar corporations to contribute more taxes is a fair approach to bolster funding for essential services like the NHS. “We all recognize the necessity of these tax increases to adequately support our public services,” acknowledged Newton-Smith.
Yet, she cautioned that the reduction of the National Insurance payment threshold has left companies stunned, with the impact being “truly severe.”
In her address, she urged the government to consider reforms that would enhance economic growth—such as granting businesses greater freedom in utilizing apprenticeship levy funds and updating commercial property business rates, along with simplifying the planning system.
Conservative leader Kemi Badenoch expressed her unease at the rising tax burden on businesses during the CBI conference, stating, “The new government seems to believe that invisible businesses can shoulder these costs, but it’s the everyday people who ultimately suffer, whether through higher prices or stagnant wages, and sometimes both.”
