MercoPress. South Atlantic News Agency

Labour anticipates a tax increase to fill a £22bn Tory “hole” in UK public finances

Labour said repeatedly during the election campaign there would be no tax rises on “working people”, but Conservatives had insisted Labour would increase them.

UK Labour chancellor Rachel Reeves anticipated that the government of PM Keir Starmer will have to raise some taxes in October's Budget, following the claim on Monday that the previous Tory government left a £22bn “hole” in the public finances.

Labour said repeatedly during the election campaign there would be no tax rises on “working people”, but the Conservatives had insisted Labour would increase them.

Speaking on News Agents podcast, the chancellor was pushed on which taxes the government would raise. Ma Reeves said the government has already announced details of how it will add value added tax (VAT) to private school fees at the standard rate of 20% to fund 6,500 new teachers in England.

On Tuesday, Ms Reeves repeated the Labour manifesto commitment of no VAT, national insurance, or income tax increases, but did not rule out inheritance tax, capital gains tax, or pension reform.

“I'm not going to write a Budget or start to write a Budget on this podcast,” she said, adding that Labour wants to stick to “sensible” rules aimed at bringing the government's longer-term debts down.

Ms Reeves' comment comes after she scrapped a number of infrastructure projects, and announced the winter fuel allowance for pensions would be means-tested, as part of a series of measures aimed at addressing a shortfall in the public finances.

Labour and the Conservatives have been locked in a row over who is to blame for the lack of money in the public purse.

In response to Ms Reeves' podcast interview, shadow chancellor Jeremy Hunt wrote on the social media platform X: “By refusing to take the difficult decisions needed, Rachel Reeves will do what she planned all along like every Labour chancellor in history - raise your taxes.”

On Monday Ms Reeves had said the Conservatives' “undisclosed” previous spending had forced her to axe the winter fuel allowance and make billions in other cuts.