Rachel Reeves has defended the £40bn in tax increases in autumn’s budget as businesses brace for their impact, saying NHS waiting lists would now be higher if she had not taken action.
Employers are set for a £25bn increase in national insurance contributions (NICs), which comes into force on 6 April, at the same time as consumers are being hit by a slew of increases in bills for everything from utilities to car tax.
Challenged about her decisions by MPs, the chancellor said “we increased national insurance contributions and we put £25bn extra investment into our NHS. We think that was the right priority.”
If she had not raised taxes, Reeves said, it would have meant “further increases in NHS hospital waiting lists”, instead of which they have declined for the past five months.
Asked by the Conservative MP Harriett Baldwin about the impact of her policies, Reeves added: “Other people would say, ‘no, don’t put more money into the NHS,’ and it is absolutely their right to say that … but you have to be honest, because if you want that extra money, you have to support the taxes to pay for it”.
Business groups have warned about the risk of job losses caused by the NICs increase coming alongside the 6.7% increase to the national living wage for people aged 21 and over from this week.
But the chancellor said there was little evidence so far of a significant downturn in the jobs market.
“Obviously we look at all of the labour market data. At the moment it’s showing that despite some of the concerns that have been raised, wages are growing at twice the rate of inflation,” she said. “Vacancies have stabilised at a relatively high level, which again gives confidence that businesses do want to carry on hiring.”
As MPs grilled her about last week’s spring statement, the chancellor stressed the importance of changes she made to the government’s fiscal rules, to allow for a higher level of investment than her predecessor, Jeremy Hunt, had planned.
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“The biggest long-term impact that we’ve made so far as a government is to unlock and maintain that capital spending,” she said.
Source: www.theguardian.com