Will Labour put up taxes? What we know after Rachel Reeves’ speech

Rachel Reeves has curbed winter fuel payments and scrapped the social care cap in an effort to fill a £22bn "black hole" in the public finances.

The chancellor said the new Labour government will also keep its manifesto pledge of charging VAT on private school fees.

Reeves set out a series of cuts in her spending audit in the House of Commons on Monday and hinted that there could be tax rises in the budget this autumn, which will take place on 30 October.

She later confirmed: “I think that we will have to increase taxes in the budget.” However, she told the News Agents podcast that the rises would not hit income tax, national insurance or VAT.

“We had in our manifesto a commitment to fiscal rules to balance day-to-day spending through tax receipts, and by the end of the forecast period, to get debt down as a share of GDP," she said.

“Those are sensible fiscal rules to keep a grip of the public finances. We also made other commitments in our manifesto, not to increase national insurance, VAT or income tax for the duration and we’ll stick with those.”

What did Rachel Reeves say?

The chancellor accused the previous Conservative government of "covering up" a projected overspend of £22bn beyond what they had planned for, leaving Labour inheriting a financial black hole.

She said her government aims to recoup £5.5bn this year and £8bn next year.

Reeves announced a number of measures to help attempt this, including scrapping the Dilnot reforms to social care, which would have introduced a more generous means test and raise capital limits for individuals’ contributions to their own care.

Watch: Chancellor says £22bn 'black hole' in the economy is unsustainable

Winter fuel payments will be scrapped for about 10 million pensioners who do not currently receive pension credit or other benefits, and a planned £1.7bn tunnel under Stonehenge has also been axed.

The Restoring our Railways programme will also be scrapped, as well as the controversial Rwanda migration scheme, saving £800m this year.

The government's plan to charge VAT at 20% on private school fees will also go ahead, starting in January 2025.

• Read more: Rachel Reeves’ spending axe at a glance: What was in Chancellor’s speech? (PA Media)

Will Labour put up taxes?

Reeves ruled out raising income tax, national insurance or VAT, as outlined in her party's manifesto before the election.

However, she said the budget in the autumn will involve "taking difficult decisions to meet our fiscal rules across spending, welfare and tax".

The new government has previously refused to rule out raising capital gains tax and inheritance tax.

Paul Johnson, director of the Institute for Fiscal Studies (IFS) think-tank, said: “There will need to be some big fiscal decisions in the autumn. Something will have to give."

He told Times Radio it seemed "pretty likely” the government will raise taxes in some form.

James Smith, research director at the Resolution Foundation economic think-tank, said Reeves was "facing tough choices on further tax rises or spending cuts at the autumn budget".

Meanwhile, Investec Economics economist Philip Shaw said Reeves “laid the ground for some increases in other forms of taxation” such as capital gains tax and inheritance tax.

And Myron Jobson, senior personal finance analyst for Interactive Investor, said: “It is increasingly clear that a cocktail of spending cuts and tax changes could be on the cards to get the UK economy back on an even keel.”

What did Labour say in its manifesto?

Four months before the election, the IFS accused Reeves and the now shadow chancellor Jeremy Hunt of being joined in a "conspiracy of silence" about the tough tax and spending choices facing the UK.

Johnson said of Labour's pledges: "This was not a manifesto for those looking for big numbers. The public service spending increases promised in the 'costings' table are tiny, going on trivial. The tax rises, beyond the inevitable reduced tax avoidance, even more trivial."

So far, Labour says it is sticking to its manifesto pledges of not raising income tax, national insurance and VAT.

What has the reaction been?

• Martin Lewis slams Rachel Reeves' cut to winter fuel payments for pensioners

Martin Lewis has slammed cuts to the Winter Fuel Payment, which will see an end to the previously universal entitlement for pensioners. "Many pensioners eke out the £100 to £300 Winter Fuel Payments to allow them to keep some heating on through the cold months,” he said. (Evening Standard)

• UK businesses say ‘worst yet to come’ after Chancellor flags spending shortfall

Business groups have said the "worst is yet to come" after the Chancellor's spending decisions, as she issued an “ominous warning” over potential future spending cuts and tax changes. Myron Jobson, senior personal finance analyst for Interactive Investor, said: “The worst may be yet to come, as the chancellor issued an ominous warning that even more difficult decisions will be made in the Budget scheduled for the eve of Halloween." (PA Media)

• The Labour Party may have just doomed the Tories for a generation

"The Tory party threw away its right to critique the Left on tax rises when it let them rise to a peace-time high. It can hardly take umbrage at Labour mendacity when, in government, it took post-truth politics to a new level, notably by saying it backed lower immigration while letting numbers surge." (The Telegraph)