The chancellor says she will make “necessary choices” to protect public services and bring down debt. But critics accuse her of preparing to break Labour’s manifesto tax promises.
00:01As Chancellor, I have to face the world as it is, not the world that I want it to be.
00:05And when challenges come our way, the only question is how to respond to them, not whether to respond or not.
00:13And as I respond at the budget on the 26th of November, my focus will be on getting NHS waiting lists down,
00:20getting the cost of living down and also getting the national debt down.
00:24Chancellor Rachel Reeves used an unusual Downing Street speech to prepare the ground for what could be the toughest budget in years.
00:34She said the government must tackle inflation, rebuild public finances and bring down debt, even if that means unpopular choices.
00:43The government, as they've been telling us pretty much some sort of day one since they got into government, have got a black hole to deal with, left by the previous administration.
00:51And of course, we know all the sort of chaos we had under sort of Boris Johnson, Liz Truss and then Rishi Sunak, who did his best to try and solve problems, but found it difficult.
01:00Also to say what's going to be pretty monumental is the fact that this will be the first time that the basic rate of tax will go up if the rumours are sort of correct.
01:09And it's going to go up by 2% since the 1970s. We've been inured to a sort of a whole generation, you know, 50 years, you know, think about that, 50 years of taxes coming down when governments come in.
01:22And indeed, all governments like to be in a position where they can make people feel better off by, if you like, putting money in our pocket.
01:28According to the Independent Office for Budget Responsibility, slower productivity growth and higher borrowing costs could lead the Treasury with a £20 billion gap to plug, if it's to meet its own fiscal rules.
01:43The tax rate may go up by 2%. Now, of course, if you remember, or the viewers remember, that in the Labour manifesto prior to the last election, which is only sort of 16 months ago, so not that long when they got that huge majority,
02:00they promised that working people would not be affected.
02:03And what's going to happen is that if the 2p goes on, so the income tax, it'll be balanced by sort of Nash Insurance, which will also come down by 2p.
02:11And what that will mean is it will be sort of neutral for working people, but the people that will lose out most particularly will be people who are sort of paying tax, but not working, i.e. pensioners.
02:22So they will sort of experience a sort of a hit to their pocket, which, of course, is going to be sort of about as welcome as a wet day in sort of July.
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