Brits brace for tax HIKES after week of Commons chaos – as Reeves faces ‘perfect storm' of Budget misery
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BRITS brace higher taxes this autumn after Rachel Reeves warned Labour's welfare U-turns will come at a 'cost' - with experts saying the bill could hit £40 billion.
The Chancellor yesterday opened the door to painful tax hikes after a week of Labour chaos, which saw her break down in the Commons and lose control of key spending plans.
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Chancellor Rachel Reeves
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Sir Keir Starmer and Rachel Reeves share an awkward hug at the launch of the NHS 10-year plan
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The Chancellor was seen crying at PMQs sitting on the frontbencher next to Sir Keir Starmer
Credit: PA
In her first public comments since the dramatic scenes in Parliament, Ms Reeves admitted the Government's retreat on welfare cuts has blown a multi-billion-pound hole in the public finances — and taxpayers will be left to fill the gap.
Pressed on whether she would raise taxes, she said: 'Of course there is a cost to the welfare changes that parliament voted through this week and that will be reflected in the budget.
'But I'm also very, very clear that [the] stability that we've been able to return to the economy, which has enabled the Bank of England to cut interests rates four times, is only possible because of the fiscal discipline which is underpinned by the fiscal rules.
"And we'll be sticking to those because they're absolutely vital for the living standards of working people and also the costs that businesses face.'
'Of course there is a cost to the welfare changes that parliament voted through this week and that will be reflected in the Budget."
The Chancellor's stark warning piles fresh pressure on families and businesses already battling high taxes and rising costs — and marks a sharp reversal from her pledge not to come back "with more borrowing or more taxes" after last year's Budget.
Economists say the fallout could force Ms Reeves to announce at least £10 billion in tax rises this autumn - and possibly up to £40 billion - to stop the government breaking its own fiscal rules.
Ben Zaranko, senior economist at the Institute for Fiscal Studies, warned: "It's not hard to imagine a world where they are of a ballpark similar scale to last autumn.
"If you have the perfect storm of economic forecasts being downgraded, additional spending commitments because these reforms haven't got through parliament and the world is in a gloomier place generally, you could comfortably be into double figures billions even before you talk about any retail offers.
"A £20, £30, £40billion budget is not what the government would want but it's not impossible by any means."
It comes after Labour MPs forced the Chancellor into scrapping welfare reforms, including planned cuts to Personal Independence Payments, which alone will cost £5 billion.
Ms Reeves also axed changes to winter fuel payments at a further £1.25 billion — while the threat of abolishing the two-child benefit cap looms large, piling extra pressure on the public finances.
Allies of Ms Reeves believe Labour rebels must now 'own' the consequences of their revolt.
The Chancellor broke her silence yesterday, insisting she was 'cracking on with the job' after wiping away tears next to the PM in the Commons.
She told broadcasters: 'Clearly I was upset yesterday and everyone could see that. It was a personal issue and I'm not going to go into the details of that.
'My job as Chancellor at 12 o'clock on a Wednesday is to be at PMQs next to the Prime Minister, supporting the government, and that's what I tried to do.
'I guess the thing that maybe is a bit different between my job and many of your viewers' is that when I'm having a tough day it's on the telly and most people don't have to deal with that.'
The markets were rattled by the Chancellor's Commons appearance, with the cost of government borrowing spiking amid speculation she could be sacked — but the PM later insisted she is going nowhere.
The PM also claimed he hadn't noticed Ms Reeves crying, saying: 'I'm literally up and down, looking at who's asking me a question, thinking about my response and getting up and answering it. No Prime Minister ever has side conversations during PMQs.'
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