“No more tax increases in this Parliament”, Chancellor tells MPs

Rachel Reeves was speaking at an oral evidence session of the Treasury Committee on Wednesday 6 November, saying last week’s Budget was a “reset” which she does not plan to repeat. “We now need to live within the means we have set ourselves,” she added.

Other government witnesses at the session were:

• James Bowler, Permanent Secretary, HM Treasury
• Will Macfarlane, Director, Strategy, Planning and Budget, HM Treasury
• Conrad Smewing, Director General, Public Spending and Joint Head, Government Finance Function, HM Treasury

Growth and fiscal policy

The Chancellor told the committee that growth is the “number one mission of this government”, to “ensure we get the money to keep taxes down and invest in our public services”.

She added she does not have a GDP growth target figure, instead targeting a goal of "fastest sustained growth in G7". “An arbitrary growth number wouldn’t be the right approach,” she added. “It’s where we are in the league table.”

She stressed the importance of “long-term views” for fiscal policy, rather than measures that will only affect the current parliamentary term. Asked if she was “happy” with growth forecasts, she said: “No, I’m not. I want growth to be faster”.

James Bowler said that the government’s plans to hold just one fiscal event per year would allow more time to deliver the policies announced, rather than perpetually being in “policy development mode”.

Committee member John Glen (Conservative) mentioned that growth projections had already been cut in the wake of Donald Trump’s US election victory. The Chancellor said it was “too soon” to see what impact it would have.

She added that trade between the UK and US, worth £311 billion per year, was “very important”, adding: "I'm confident that those trade flows will continue under the new President."

“We’re optimistic in our ability to shift the global economic agenda,” she said.

National Insurance

Asked by Bobby Dean (Lib Dem) about the impact of National Insurance rises on wages, the Chancellor said she would not dispute OBR findings, but reiterated that “difficult choices” were needed to fill the spending gap. She said that some of the rises could be absorbed by businesses through profits and efficiency, though some would also be reflected in wages.

The Chancellor said the lowest wage earners “won’t see any of the National Insurance changes passed on to them” due to the rise in the minimum wage, and the only group worse off is the top earners.

She added that other options could have included reversing previous cuts to employee NICs or freezing thresholds, but these were “not the right thing to do”.

Inheritance tax

John Glen asked how farms, many of which make profits of around 1%, would cope with inheritance tax bills following the Budget announcement that, from April 2026, inherited agricultural estates worth more than £1 million will be liable to the tax at 20%. Reeves replied: “for estates where there is going to be an inheritance tax bill, that bill can be paid over a 10-year period, interest free. That doesn’t exist for anyone else paying inheritance tax, but we thought it was right.”

She added that in the last year for which data is available, 40% of agricultural property relief went to 7% of estates, with £119 million going to 37 estates. “It is not possible to continue the rate of support that was previously available,” she said.

Other issues

The Chancellor said she is “not looking at” road pricing as an alternative to fuel duty, and that the current focus is on trying to increase the uptake of electric vehicles, which has fallen behind target. She added that she made the decision to freeze fuel duty again in the Budget due to continued higher borrowing costs and the conflict in the Middle East.

Reeves also ruled out capital gains tax on family home sales, while confirming that the government had considered council tax rises but concluded that they did not want to allow local authorities to increase it past the current 5% cap.

Asked by John Glen how the entire tax regime following the Budget could affect investment in the UK, the Chancellor reiterated this was a “reset Budget” and “we’re not going to repeat a Budget like this again”. However, she warned that she would not “write five years’ worth of budgets now”.

Reeves said the corporate tax roadmap, published alongside last week’s Budget, was “widely welcomed” by businesses and caps corporation tax at the current 25% for the rest of Parliament. “There were numerous changes to corporation tax in the last parliament which was not good,” she added, while saying the Government has committed to permanent full expensing, the £1 million annual investment allowance and a £20 billion R&D budget next year.

The committee also discussed issues including the new minimum wage, the cost of living, spending on public services including the NHS and productivity.

Watch the full session or read the transcript. The Treasury Committee also heard from the Office for Budget Responsibility and Institute for Fiscal Studies on Tuesday 5 November.