Chancellor Rachel Reeves has confirmed that she no longer stands by her pledge last year not to raise taxes, saying “the world has changed” due to global conflicts, new U.S. tariffs, and rising borrowing costs.
Speaking ahead of her keynote address to the Labour Party conference in Liverpool on Monday, Reeves acknowledged that economic realities have changed dramatically since her original commitment. She stressed that the government must adapt to new financial pressures.
Last November, Reeves had said she was “not coming back with more borrowing or more taxes”, a pledge she now frames as a reflection of conditions at that time rather than a lasting guarantee.
On Monday, when asked whether she still stood by that statement, Reeves replied: “Well, look, I think everyone can see in the last year that the world has changed, and we’re not immune to that change.”
“Whether it is wars in Europe and the Middle East, whether it is increased barriers to trade because of tariffs coming from the United States, whether it is the global cost of borrowing, we’re not immune to any of those things.”
Chancellor Rachel Reeves
VAT Commitment Remains Firm Despite Speculation
However, the chancellor hinted that Value Added Tax would not rise in November’s budget. She insisted that protecting working families from added financial strain remains a top priority. She warned that increasing the VAT would hit working households the hardest and risk stoking inflation.
“We made a commitment in our manifesto, and those commitments do stand. And they stand for a reason, because in the last parliament it was ordinary working people who bore the brunt of the economic mismanagement.”
Chancellor Rachel Reeves
She also pushed back against rampant speculation about what could appear in her upcoming budget. “There are a lot of people who claim to know what is going to be in my budget. They don’t,” she said.
“A lot of them are talking rubbish, and frankly, a lot of it is very irresponsible. People were told last year that I was going to do this, I was going to do that, and people made decisions with their money that often were irreversible decisions.”
Chancellor Rachel Reeves
Reeves Backs Starmer On Immigration Dispute
Beyond tax policy, Reeves weighed in on immigration debates, backing Labour leader Keir Starmer’s condemnation of Reform UK’s plan to retrospectively strip large numbers of immigrants of the right to remain in the UK.
On Sunday, Starmer had described the proposal as racist. Reeves agreed, stressing that it targeted individuals who were legally settled and contributing to British society.
“You’ve got to call out policies when they’re wrong. And this is a wrong policy.
“Now there’s one thing to say that people who are here illegally should be sent home. Absolutely they should. And we’ve got record numbers out of this country.”
Chancellor Rachel Reeves
But she drew a sharp line between deporting those without legal status and forcing out long-term residents.
“It is quite another thing to say the person who is sitting next to you at work today, who was born abroad, should be deported. Quite a different thing to say your next-door neighbour who goes to work every day and contributes to our country, sends their kids to the local school, volunteers at the community centre – because they weren’t born here, they’re going to be deported.”
Chancellor Rachel Reeves
Reeves’ intervention underscores Labour’s effort to frame itself as both fiscally responsible in turbulent global conditions and socially committed to fairness at home, as the party continues to define its stance ahead of the next budget announcement.
