Rachel Reeves calls for Labour unity as make-or-break Bud...

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Rachel Reeves calls for Labour unity as make-or-break Budget looms

Chancellor expected to pull the lever on tax hikes in Wednesday’s Budget

Caitlin DohertyPolitical CorrespondentTuesday 25 November 2025 07:42 GMTComments

CloseReeves recognises cost of living still 'big burden' as inflation dips

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Rachel Reeves looked to rally the Labour troops on Monday night, urging them to back this week’s Budget, which is expected to contain a ‘smorgasbord’ of tax rises.

The chancellor is due to deliver her Budget in the House of Commons on Wednesday, in which she is widely expected to pull the lever on tax hikes in order to fill the public coffers.

Ms Reeves addressed restive Labour backbenchers on Monday night and called for unity as she urged them to back her plans for the economy.

Many Labour MPs have become increasingly frustrated about the prospect of tax rises on the horizon, amid their party’s opinion poll slump less than two years into a term of government.

At the gathering of the Parliamentary Labour Party, Ms Reeves told MPs that politics is a “team sport”.

Prime Minister Sir Keir Starmer and Chancellor Rachel Reeves are facing an economy of slowing growth and rising unemployment, though a spike in inflation may have peaked (Stefan Rousseau/PA) (PA Wire)

The chancellor’s decision to remind MPs of this was “because united parties are the ones who win elections”, according to a Treasury spokesman.

Ms Reeves also described the Budget as a “package” not a “pick ‘n’ mix”, urging MPs to back the whole of it rather than single out parts they dislike for criticism.

Labour backbenchers are likely to be content with 95 per cent of it, she suggested, as she hinted at difficult political decisions yet to be announced.

The chancellor also told MPs the Budget will focus on three priorities: “Cutting the cost of living, cutting NHS waiting lists and cutting the cost of debt.”

Ms Reeves is said to be facing a more difficult economic outlook in the medium term, with Sky News reporting that the Office for Budget Responsibility has downgraded its growth forecast for 2026 and every other year before the next election due in 2029.

The downgrade, and the subsequent reduction in tax revenues, will force the chancellor to hike taxes to balance the books and build a bigger buffer against future shocks than the historically-low level of headroom she has previously given herself.

As she is preparing to undertake what has been described as a “smorgasbord” approach to raising tax, Ms Reeves could hit high-value properties with a new levy that applies to those worth more than £2 million and could raise £400-£450 million, according to reports.

But she has already been warned about the impact of the so-called “mansion tax” if it is implemented incorrectly.

Economist Paul Johnson, formerly of the influential Institute for Fiscal Studies think tank, told The I Paper that a full revaluation of council tax was needed, rather than simply raising the highest tax bands.

Scottish Labour leader Anas Sarwar called the Budget “a moment to restore confidence and put this Labour government back on track”.

Writing in The Independent, he said: “Ultimately both voters and businesses will have benefitted from decisions this UK Labour government has made.

“The tragedy is the failure to project confidence and communicate those changes have left them feeling uncertain. But if we do not act to increase business confidence, then we will be stuck in the doom loop of speculation, timidity and short-termism that holds our economy back.”