WEBVTT - UK Chancellor Rachel Reeves Talks Tax Increases, Budget

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. Chancellor, before you began

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<v Speaker 1>your budget, the Office for Budget Responsibility some what stole

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<v Speaker 1>your thunder with its surprise leaf of its forecast. Should

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<v Speaker 1>its boss, Richard Hughes be sacked?

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<v Speaker 2>Well, Richard Hughes and the OBR have confirmed that they

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<v Speaker 2>are launched. They have launched an investigation into what happens.

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<v Speaker 2>It obviously was a serious breach. They've apologized for that

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<v Speaker 2>and put out a full statement.

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<v Speaker 1>So leik aside, are you happy with the market reaction today?

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<v Speaker 2>I think it's best for chancellors not to comment on

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<v Speaker 2>what's going on in the market. But what I was

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<v Speaker 2>determined to deliver today, as well as cuts to the

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<v Speaker 2>cost of living and cuts to NHS waiting lists, was

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<v Speaker 2>cutting borrowing and the debt. And you can see in

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<v Speaker 2>the budget today the increase in headroom, more than doubling

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<v Speaker 2>the headroom to twenty one point seven billion pounds and

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<v Speaker 2>indeed meeting that target on the stability rule a year early.

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<v Speaker 1>You talk about borrowing, The Institute for Fiscal Studies says

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<v Speaker 1>it's a spend now, pay later budget. What do you

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<v Speaker 1>say to traders who are still concerned that this fiscal

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<v Speaker 1>tightening's backcluded. Well.

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<v Speaker 2>Listen to the IMF, and the IMF say that there

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<v Speaker 2>is a faster rate of consolidation in the UK than

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<v Speaker 2>in any G seven economy, and we see that borrowing

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<v Speaker 2>as a share of GDP falling right through the forecast

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<v Speaker 2>period after hovering around five percent for many years, we

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<v Speaker 2>are actually getting that down.

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<v Speaker 1>But the Resolution Foundation says this budget leaves much of

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<v Speaker 1>the fiscal repair job to twenty twenty eight and beyond.

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<v Speaker 2>Well, some tax reforms like the high Value Council tax surcharge,

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<v Speaker 2>take a while to introduce, and also want to make

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<v Speaker 2>sure that we get these things right. And similarly the

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<v Speaker 2>changes with the further freeze in the tax allowances, they're

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<v Speaker 2>being frozen after they were already frozen for seven years

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<v Speaker 2>from twenty twenty eight. But there are also real savings

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<v Speaker 2>in spending right now with better balance sheet management, cracking

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<v Speaker 2>down on some of the waste and inefficiencies, and indeed

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<v Speaker 2>introducing a further efficiency drive within our public services. So

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<v Speaker 2>this is not all about tax We've also taken measures

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<v Speaker 2>on the spending side as well.

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<v Speaker 1>You mentioned the freeze on income tax thresholds for three years.

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<v Speaker 1>It's going to create millions of new tax payers. Do

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<v Speaker 1>you accept that breach is the spirit of your manifesto?

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<v Speaker 2>Well, the manifesto was clear that we wouldn't increase the

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<v Speaker 2>rates of income tax, national insurance or vaight. But I

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<v Speaker 2>do recognize, and I said this clearly in the House

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<v Speaker 2>of Commons today, that freezing the thresholds for a further

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<v Speaker 2>three years after they were already frozen for seven years

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<v Speaker 2>under the previous government does mean that I'm asking ordinary

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<v Speaker 2>people to contribute more. I think that is the fair

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<v Speaker 2>thing to do in the wake of the productivity downgrade

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<v Speaker 2>from the Office for Budget Responsibility, which will see sixteen

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<v Speaker 2>billion pounds less come in in terms of tax revenue.

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<v Speaker 2>But I've kept that cost on ordinary working people as

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<v Speaker 2>low as possible by closing loopholes in the tax system

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<v Speaker 2>and by introducing some taxes, for example on ev charging,

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<v Speaker 2>which the previous government ducked, even though it's been a

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<v Speaker 2>ticking time bomb for some time.

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<v Speaker 1>But do you accept the obr's conclusion that this stealth

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<v Speaker 1>tax rise is going to reduce economic output because of

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<v Speaker 1>the financial incentive against working in order to spending on benefits.

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<v Speaker 2>I think the OBR have been pretty clear that no

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<v Speaker 2>measures in this budget impact their growth forecast. Indeed, they

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<v Speaker 2>point to things like the India Deal, the Planning and

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<v Speaker 2>Infrastructure Bill as being positive for the economy. And indeed

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<v Speaker 2>our changes to universal credit will result in an additional

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<v Speaker 2>fifteen thousand people in the workforce in the next few years.

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<v Speaker 1>Well over all, the ABR says, none of your policy

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<v Speaker 1>measures boost growth. What does that say about the government's

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<v Speaker 1>growth ambitions.

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<v Speaker 2>Well, in the spring, you'll remember that they scored six

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<v Speaker 2>point eight pounds the biggest ever non fiscal scoring that

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<v Speaker 2>their OBR have ever done for our planning reforms. Just

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<v Speaker 2>a couple of days ago the Planning and Infrastructure Bill

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<v Speaker 2>was in the House of Lords. That is now almost complete,

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<v Speaker 2>just one more return to the House of Commons and

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<v Speaker 2>then that bill will get royal ascent. And the OBR

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<v Speaker 2>haven't scored the India Deal, the EU Deal or the

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<v Speaker 2>US Deal. And that's why I'm confident we can beat

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<v Speaker 2>these forecasts on growth. We've beaten them this year with

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<v Speaker 2>one and a half percent growth now forecast, not the

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<v Speaker 2>one percent they forecast in the spring, and I'm confident

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<v Speaker 2>that we can beat those forecasts again.

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<v Speaker 1>So finally, Chancelly, you've effectively just broken your promise made

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<v Speaker 1>after the last budget not to raise taxes again. Will

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<v Speaker 1>you now rule out more tax rises, whether directly or

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<v Speaker 1>by stealth this parliament.

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<v Speaker 2>So last year I had to close the black hole

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<v Speaker 2>in the public finances left by the Conservatives, and in

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<v Speaker 2>the budget last year I lived within the forecast set

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<v Speaker 2>by the OBR. They have now change their forecasts around

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<v Speaker 2>productivity and they are very clear that's nothing to do

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<v Speaker 2>with the policy of this government, but that does mean

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<v Speaker 2>they forecast lower tax revenue coming in. And I was

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<v Speaker 2>always clear that would never play fast and loose with

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<v Speaker 2>the public finances because it's ordinary working people and businesses

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<v Speaker 2>that pay the price when that happens. So these are

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<v Speaker 2>the fair and necessary choices in the circumstances that I face.

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<v Speaker 2>But what I'm now determined to do more than ever

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<v Speaker 2>is to grow our economy so that we have the

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<v Speaker 2>revenue both to keep taxes down and also to fund

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<v Speaker 2>our public services. And that is what this government's plan

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<v Speaker 2>for growth is all about, whether it's pensions reform, planning reform,

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<v Speaker 2>the changes today to help make Britain the best place

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<v Speaker 2>to start up, to scale up and to stay with

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<v Speaker 2>the changes to stamp duty for shares for companies newly

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<v Speaker 2>listing in the UK. I'm determined that we get the

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<v Speaker 2>growth that our economy has been sorely lacking for too long,

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<v Speaker 2>and we do that through the forms that we've set out.

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<v Speaker 1>No confirmation of no new taxes.

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<v Speaker 2>Well, no chancellor can write future budgets. I took the

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<v Speaker 2>fair and necessary choices today, but my focus has been

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<v Speaker 2>and always will be on growing our economy so that

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<v Speaker 2>we can keep taxes down and have the money we

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<v Speaker 2>need to invest in our public services.