What Rachel Reeves said about tax and benefits in her conference speech today
Rachel Reeves attempted to strike her most optimistic tone yet for the future of the UK economy and insisted there would be "no return to austerity".
Addressing the Labour Party conference in Liverpool on Monday, the chancellor sought to dispense with much of the doom and gloom of past comments in which she has warned of "difficult decisions" to fix the country's public finances.
Chief among these has been Labour's decision to scrap winter fuel payments for some nine million pensioners, a policy that has been criticised by campaigners and branded "cruel" by the leader of the Unite union.
Reeves said: “There will be no return to austerity. Conservative austerity was a destructive choice for our public services – and for investment and growth too. We must deal with the Tory legacy and that means tough decisions. But we won’t let that dim our ambition for Britain."
Here are the key moments from Reeves's speech that will affect you:
Winter fuel allowance
What she said: "I made the choice to means test the winter fuel payment. There’s no change in our position on winter fuel, our focus remains on encouraging more people who should be eligible for pension credit to be applying for it, but the policy remains the same.”
One of the most controversial issues of the conference is the government's decision to axe winter fuel payments for about nine million pensioners.
Reeves said: "I know not everyone in this hall or in the country will agree with every decision I make. I will not duck those decisions. I judged it the right decision in the circumstances we inherited. I did not take those decisions lightly."
Reeves defended the move by saying the triple lock will lead to the state pension rising by about £1,700 over the course of this parliament. She has said previously that increased take-up of pension credit – which will now be used to determine eligibility for the winter fuel payments worth up to £300 – and state pension rises would protect incomes. Campaigners have warned this will be too late for many this winter.
Trade unions have demanded a U-turn on the policy, but a debate and a non-binding vote on reversing the plan will now take place on Wednesday instead of Monday, angering some delegates. There were boos in the conference hall at the postponement of the vote.
Reeves has blamed the state of the government's finances left by the Tories for making the change to winter fuel payments. “These were not changes that I expected to make or wanted to make," she told the BBC on Monday morning.
Corporation tax
What she said: "We will cap corporation tax at its current level for the duration of this parliament."
Companies currently pay 25% on profits over £250,000 and 19% on profits up to £50,000. The University and College Union (UCU) has called on the chancellor to raise corporation tax to help solve the university funding crisis, saying a 4.3% rise would raise £17bn.
However, Reeves has ruled out introducing tax hikes for businesses in the UK.
In her speech, she said: “I want small business owners to know that they can plan ahead, invest, expand, confident that they have a government that has their back and a tax system that will support not punish them. And I want investors to see Britain as a stable place to invest – and yes, to make a profit."
VAT, income tax and national insurance
What she said: "We will not increase the basic, higher or additional rates of income tax, national insurance, or VAT."
Reeves promised to uphold Labour's pre-election manifesto pledge of not raising national insurance, income tax or VAT, which will have a huge impact on the country's workers.
However, the Institute for Fiscal Studies (IFS) think tank has warned that this decision could lead the chancellor to need extra revenues from "economically damaging" tax rises that only bring short-term relief.
There is speculation that revenue could instead come from rises in capital gains tax, inheritance tax and stamp duty on property sales.
Wealth taxes
What she said: "We will crack down on tax avoidance and tax evasion."
Reeves has sought to draw a distinction between not raising taxes on workers but being prepared to tax those Labour argues should be paying more into the public purse.
The government is reportedly examining potential tax increases to raise revenues and is said to be considering an increase in capital gains tax, changes to inheritance tax and a reduction in pension tax relief for top earners in the budget on 30 October.
In an interview published in the Sunday Times this weekend, Reeves ruled out a new, personal wealth tax, despite calls from the Unite union to introduce a 1% tax on people who have £4 million or more.
And despite not referencing that in her speech on Monday, Reeves said the government will extend the energy and profits levy on oil and gas producers to invest in homegrown energy, as well as ending non-dom tax loopholes.
Free breakfast clubs in primary schools
What she said: "This will start in hundreds of schools for primary-aged pupils from April, ahead of the national rollout."
Reeves confirmed that some primary schools will begin having free breakfast clubs from April 2025.
This is the first step in a process she said will lead to a national rollout across every primary school in England.
Up to 750 primary schools will take part in the initial scheme, which will run next year from April to July.
VAT on private school fees
What she said: "This government will introduce VAT on private school fees to invest in our state schools."
Reeves reiterated her party's manifesto pledge to bring in VAT on private school fees. This will be introduced from 1 January 2025 and parents cannot avoid the tax by paying fees in advance.
The plan is to use the extra revenue to invest in state schools, Reeves told the conference.
Some private schools have already started putting up their fees in response to the policy, with reports that many parents are considering moving their children out of private schools and into state education.
