Rachel Reeves: Taxes will rise to cover scrapped welfare reform
The chancellor told cabinet on Tuesday that the decision to abandon welfare reforms meant taxes would have to rise to cover the cost. She said the rises in her first budget, which included a £24 billion increase in employers' national insurance contributions, were 'painful' but were the 'low-hanging fruit'.
Tax rises in the autumn are likely to be smaller than last year's but she is expected to have to raise tens of billions of pounds more. Reeves told ministers that would be a 'big challenge' given that she has limited options for doing it.
Economists have warned that the scale of the hole in the public finances means that she may have to break Labour's manifesto pledge not to increase income tax, national insurance or VAT. There are also suggestions that she could raid pension savings, which was rejected before the last budget.
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