Rachel Reeves’s speech to Labour party conference was the clearest indication yet that taxes will be rising at the Budget in November.
The Chancellor emphasised that she will not break the self-imposed borrowing rules which state that all day-to-day public spending must eventually be covered by tax receipts.
This was a rebuke to critics within Labour – Andy Burnham the most high-profile among them – who think Reeves is overly attached to the idea of balancing the books and want her to turn on the spending taps as soon as possible.
But if she is ruling out more borrowing, and if spending cuts would be politically impossible to deliver, that leaves only tax rises as a way to cover any shortfall in the public finances.
The official watchdog, the Office for Budget Responsibility, will not deliver the first draft of its economic forecast until the end of this week. Reeves’s words to the Labour faithful, however, left no doubt that she is expecting bad news.
The Chancellor said: “In the months ahead, we will face further tests, with the choices to come made all the harder by harsh global headwinds and the long-term damage done to our economy, which is becoming ever clearer.”
That mention of “further tests” is code for the tough decisions coming up in November. The “harsh global headwinds” are mostly caused by Donald Trump – not that Reeves can actually say that out loud, for fear of angering the mercurial US President.
And the “long-term damage”, according to the Chancellor, is very definitely the fault of the Conservatives’ 14 years in power. She is planning to pin the blame for all of the tax pain on the legacy of the Tories – an argument which many voters may find hard to swallow, well over a year after Labour took over.
Reeves was much less forthcoming on the details of just how she will find a higher tax take, other than committing to maintaining the manifesto pledges to leave income tax, national insurance and VAT untouched.
Taxpayers and businesses remain in the dark. The Chancellor has given a few vague hints – most recently, that some sort of “mansion tax” may be on the cards – but there is in general little opportunity for people to plan their finances ahead of the Budget.
The bulk of the speech was directed inwards to the Labour crowd, an attempt to convince them the party really is delivering on its promises of progressive change.
For those looking on from outside the conference hall, the message is simultaneously clear and muddled – your taxes will go up again, but you cannot know how.
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