Rachel Reeves accused of planning wealth tax raid on middle-class workers to fix economy

Rachel Reeves has been accused of wanting to “pick the pockets” of middle-class workers after refusing to rule out a punishing wealth tax raid. Senior Conservatives warned that the under-pressure Chancellor is planning to “tax the living daylights” out of millions of Britons to help clear up her economic mess.

Party leader Kemi Badenoch said Labour are plotting to raise taxes to “pay for their mistakes” while shadow chancellor Mel Stride said “grafters” will be clobbered. Their stark warning comes after ministers hinted that Ms Reeves is considering wealth taxes in her autumn Budget to fill a fiscal hole worth tens of billions.

Ms Reeves refused to rule it out during a broadcast interview, telling broadcasters: “We haven’t even set the date for the budget yet, so please forgive me if I’m not going to speculate about what might happen at an event that we haven’t even decided a date on yet.

But she said promises not to increase income tax, national insurance and value added tax (VAT) remained in place, along with her “non-negotiable” fiscal rules.

Ms Reeves added: “Interest rates have come down four times in the last year under this Labour Government because of the stability that we’ve managed to return to the economy, which is underpinned by those fiscal rules, which have enabled the Bank of England to cut interest rates.”

Ms Reeves remarks come as she attempts to get her floundering Chancellorship back on track in a major speech today in which she will set out a vision to turbocharge Britain’s financial services industry.

The Chancellor will tell City of London grandees in her Mansion House address that she will not risk the UK’s economic “stability”, in spite of pressure from some Labour MPs for higher public spending and looser fiscal rules.

After a damaging few weeks for Ms Reeves in which she was forced to abandon £6.25billion of welfare savings by rebellious Labour MPs and u-turn on her winter fuel payment disaster, the Chancellor will insist she has a grip on the economy.

But writing in the Daily Express, Mr Stride warns of the perilous dangers of targeting middle-earners.

In a brutal assessment he says Ms Reeves’ “poorly equipped” to run the economy and drive growth.

“The only growth she seems capable of delivering is in your bills, your taxes and government borrowing,” he warns.

He adds that Labour is plotting to target “grafters” by “clobbering aspirational, middle classes with their next inevitable tax raid” which is the “worst thing” they could do to drive growth.

Mrs Badenoch said: “Labour are going to raise your taxes, again, to pay for their mistakes.

“Britain doesn’t need more taxes. People are taxed too high already.

“It needs a government committed to bringing down spending so we live within our means. Only the Conservative Party believes this.”

Ms Reeves claims to have brought “stability” to the economy, highlighted by the fact that interest rates have come down four times in the last year.

Bank of England governor Andrew Bailey has suggested there could be larger cuts if the jobs market shows signs of weakness, pointing to the impact of Ms Reeves’ decision to hike employers’ national insurance contributions (NICs).

In an interview with The Times, the governor said the British economy was growing behind its potential.

Ms Reeves will use this evening’s (Tue) speech to unveil plans to help first-time buyers by announcing that mortgages will be available at more than 4.5 times a buyer’s income.

This will create up to 36,000 additional mortgages for first-time buyers over the first year, the Government said.

Britain’s biggest building society – Nationwide – announced last week that it is aiming to increase its high loan-to-income lending limit.

From Wednesday, eligible first-time buyers can apply for Nationwide’s Helping Hand mortgage with a £30,000 salary, down from £35,000, and joint applicants with a £50,000 combined salary – down from £55,000.

It is estimated this will support an additional 10,000 first-time buyers each year.

The changes will sit alongside the creation of a permanent mortgage guarantee scheme, delivering on a manifesto commitment, and a review of Financial Conduct Authority (FCA) lending rules that could allow prospective buyers’ records of paying rent on time to be used to show they can afford mortgage repayments.

The Chancellor is expected to say: “I have placed financial services at the heart of the Government’s growth mission.

“Recognising that Britain cannot succeed and meet its growth ambitions without a financial services sector that is fighting fit and thriving.

“And I have been clear on the benefits that that will drive.

“With a ripple effect that will drive investment in all sectors of our economy and put pounds in the pockets of working people.”