I am happy to be the ‘Iron Chancellor’, boasts Rachel Reeves amid fears of a new raid on pensions after she appointed an anti-triple lock minister with government finances crumbling_Nhy
Under-fire Rachel Reeves today boasted she can still be the ‘Iron Chancellor’ as she insisted Britain would be in a worse position if she had not hiked taxes.
The Chancellor sounded defiance in her first broadcast interview since the UK suffered an extraordinary battering from markets – with the Pound falling and borrowing costs spiking.
Ms Reeves dismissed demands for her resignation, saying she will not ‘let it get me down’ and is ‘here for the long haul’. She also renewed her comparison to Thatcher, saying she is ‘happy to be the Iron Chancellor’.
Volatility has eased somewhat this week after inflation came in below expectations, but there are fears Labour could have to raise taxes or cut spending to balance the books – with pensions potentially in the crosshairs.
Keir Starmer insisted the government will be ‘ruthless with cuts if that’s what’s necessary’, telling the Sun fiscal rules will not be bent and he is ready for a ‘fight’ with his own MPs over trimming the benefits bill.
GDP and retail sales figures have confirmed the struggles facing the economy.
High street giant Next warned this morning that Labour hiking the minimum wage and employers’ national insurance costs will make it harder for young people to get into the jobs market.
Speaking to the BBC‘s Political Thinking podcast, Ms Reeves brushed off comparisons with short-lived Tory PM Liz Truss, whose mini-budget spooked the financial markets in 2022.
Under-fire Rachel Reeves today insisted Britain would be in a worse position if she had not hiked taxes
The Chancellor sounded defiance in her first broadcast interview since the UK suffered an extraordinary battering from markets – with the Pound falling and borrowing costs spiking (pictured, interest rates on 10-year gilts)
Ms Reeves and Keir Starmer have committed to the UK having the fastest growing economy in the G7, but the economy has been lagging far behind the US
‘Every decision I make has consequences, but so does the counterfactual,’ Ms Reeves said.
‘If I had made the decision not to address those very real pressures, then this is the consequence: borrowing costs would have gone through the roof.
‘Borrowing costs not just for Government but for families and businesses, like it did when Liz Truss was prime minister.’
Pressed on whether she could suffer a similar fate to Ms Truss, who left office after just 49 days, Ms Reeves said: ‘I’m here for the long haul.’
Ms Reeves insisted she had not taken criticism of her decisions personally.
She added: ‘Some people don’t want me to succeed. Some people don’t want this Government to succeed. That’s fair enough. That’s the prerogative, but I’m not going to let them get me down.
‘I’m not going to let them stop me from doing what this Government has got a mandate to do, and that is to grow the economy, to make working people better off.’
Concerns have been raised about a further assault on pension savings after Torsten Bell was given the brief in a mini-reshuffle triggered by the resignation of City minister Tulip Siddiq.
Mr Bell, former head of the Left-wing Resolution Foundation, has in the past branded the triple lock – which ensures pension payments increase each year by the highest of inflation, earnings growth or 2.5 per cent – a ‘silly system’ which should be abolished.
He has made the case for ‘completely reforming’ pensions tax relief and advocated a sharp cut in the amount people can take out of their retirement pots tax-free from its current £268,275 to just £40,000.
Ahead of the October Budget, savers rushed to withdraw cash from their pension pots as speculation mounted that Ms Reeves was planning a tax raid.
Among the options were slashing the amount savers can withdraw tax-free at the age of 55 from up to £268,275 to £100,000.
Other options included cutting tax relief on the pension contributions of higher earners, hitting the savings of those paying the 40p or 45p rate of income tax.
Last night, the Treasury refused to rule out a further assault on pension savings after Torsten Bell, pictured, was handed the job in a mini-reshuffle triggered by the resignation of City minister Tulip Siddiq
The volume bought was down by 0.3 per cent in December, far worse than the 0.4 per cent increase analysts had pencilled in
Keir Starmer (pictured with Volodymyr Zelensky in Kyiv yesterday) has committed to making Britain the fastest-growing economy in the G7
Ms Reeves eventually decided against either move and instead introduced a new death duty by dragging pension pots into inheritance tax (IHT) for the first time.
But former pensions minister Baroness Altmann said: ‘I’m afraid it has been clear since the election that pensions and pensioners are in the line of fire. I hope that the new pensions minister will look after pensions but I fear the removal of IHT and the Winter Fuel Payment decision indicates private and state pensions are under attack.’
Sir Steve Webb, another former pensions minster who is now a partner at pension consultants LCP, said: ‘We really don’t want more rounds of speculation before every Budget. So a clear commitment to leave pension tax relief alone for the lifetime of the Parliament would be exceptionally welcome.’
