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Autumn Budget promises: Should Rachel Reeves resign?
Nov 6, 2025
Exactly a year ago today, which was exactly a week after Rachel Reeves’ first Budget - City AM editor-in-chief Christian May wrote that the Chancellor’s policies would give Brits the hangover from hell. In this instalment of Week in Business, Christian discusses whether a manifesto break on income tax would be cause for the Chancellor to resign. Get more of City AM 👇 http://www.cityam.com #politics #budget #reeves #labour #government #economics
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0:00
Exactly a year ago today, which was
0:02
exactly a week after Rachel Reed's first
0:04
budget, I wrote that the Chancellor's
0:06
policies would give Brits the hangover
0:08
from hell. So, how are you feeling?
0:11
Welcome to the Week in Business with me,
0:12
Christian May.
0:17
My reference to a hangover one year ago
0:19
was inspired by the government's absurd
0:21
postbudget boast that they' taken a
0:23
penny off the cost of a pint. I
0:26
suggested that the impact of hikes to
0:28
employers national insurance combined
0:29
with a chunky rise to the minimum wage
0:32
constitute a major disruption to
0:33
employers in retail, leisure, and
0:35
hospitality. And so it has come to pass.
0:38
What's more, as we report today, the
0:40
number of British pubs and bar
0:41
businesses appointing liquidators or
0:43
administrators has hit its highest level
0:45
in 20 years. But while I could certainly
0:47
devote this whole episode to the pain
0:49
inflicted on our hospitality sector,
0:51
we've got to zoom out and we've got to
0:53
look at what's happened between the last
0:54
budget and the one that's coming up,
0:56
where it leaves the country and where it
0:58
could leave Rachel Reeves. Ahead of her
1:00
first budget last October, the
1:02
chancellor and various ministers spent
1:04
weeks, months even telling us that they
1:06
looked at the books and things were very
1:08
bad and therefore the budget will be
1:09
difficult. There will be tough choices
1:11
and things will get worse before they
1:14
get better. That's what they said. This
1:16
was presented as harsh medicine,
1:18
unpleasant but necessary and just the
1:20
sort of hard work a Labor government was
1:22
good for. So4 billion pounds of tax
1:25
hikes and 70 billion pounds of
1:26
additional spending were pumped into the
1:29
patient. This was to fix the foundations
1:32
of our economy and prepare the ground
1:34
for economic growth. Concluding her
1:37
budget speech in 2024, Reeves said, "The
1:40
choices that I have made today are the
1:42
right choices for our country. To
1:43
restore stability to our public
1:45
finances, to protect working people, to
1:48
fix our NHS, and to rebuild Britain."
1:50
Well, let's take a look at those one by
1:52
one, shall we? To restore stability to
1:54
our public finances. Well, the wafer
1:56
thin fiscal headroom Reeves has left
1:58
herself with since last budget means
2:00
that we've had a year of vulnerability
2:02
in the bond markets and a year of debate
2:04
about how it could possibly be restored.
2:06
We've also got terrible borrowing
2:08
figures to protect working people. Well,
2:10
unemployment has ticked up every month
2:12
since the budget and inflation fueled in
2:14
part by government spending has remained
2:16
higher for longer eating away at the
2:18
income of working people. To fix our
2:20
NHS, well, is it even fixable? True,
2:23
they have carved out more hospital
2:25
appointments, but the service has been
2:27
hit by strikes. And what's more, despite
2:29
another cash injection, productivity in
2:31
the NHS has slumped again. And as for
2:34
the idea that last year's budget uh
2:36
would rebuild Britain, just consider the
2:39
extraordinary speech Reeves delivered in
2:40
Downing Street earlier this week. She
2:43
reiterated her claim that she'd fixed
2:45
the foundations of the economy. But then
2:46
she stood back, looked at her work, and
2:49
said, "Your roof's falling in, and
2:51
that's going to cost you." A long list
2:53
of excuses were rolled out. Some of them
2:54
were valid and accurate critiques of our
2:56
long-standing economic problems, many of
2:59
which we've discussed on this show.
3:01
Others were not much more than desperate
3:03
attempts to explain away anemic growth
3:05
and the need, the shocking need to raid
3:07
the nation's coffers once again at the
3:09
upcoming budget. Analysts debate the
3:11
scale of the tax rises coming. The most
3:13
optimistic assume a 20 billion pound
3:15
raid. Others talk of 40 or even 50
3:18
billion pounds needed. What's almost
3:20
certain is that the government will
3:21
break its manifesto commitments. They
3:24
didn't say much in the election campaign
3:26
last year, but what they did say time
3:28
and again was that they would not raise
3:30
income tax, VAT or national insurance.
3:33
They already played fast and loose with
3:34
that last one, hiking employers national
3:36
insurance last year, but it's income tax
3:38
that could prove to be explosive. Now
3:41
Reeves might be about to become the
3:42
first chancellor to raise the basic rate
3:44
of income tax for 50 years. It might be
3:47
accompanied by a cut in national
3:48
insurance given cover to claim that the
3:50
overall take won't have changed for
3:52
working people. But for the millions who
3:54
generate an income without being liable
3:56
for employee national insurance,
3:58
landlords, investors, entrepreneurs,
4:00
pensioners, this would be an income tax
4:02
rise. And the bottom line is the
4:03
chancellor cannot possibly expect to get
4:06
away with it. It would be utterly
4:08
outrageous and should be utterly
4:10
unforgivable for a chancellor to win
4:13
office by promising not to do something
4:15
only to go ahead and do it a year later.
4:18
However, they're trying to rewrite the
4:20
narrative or explain new context or
4:22
blame bad luck, bad weather, or bad
4:24
forecasts. Raising income tax would be a
4:26
shameful admission of failure and a
4:28
brazen, cynical act of political
4:30
dishonesty. And this from the team that
4:32
called the police over Boris Johnson's
4:34
birthday cake. Now, even if you accept
4:36
that income tax has to rise, she could
4:38
deliver that policy and then concede
4:39
that she cannot remain in post to
4:41
oversee it, she will support the
4:43
government and the budget from the
4:44
backbenches, having taken responsibility
4:46
for breaking trust with the electorate.
4:49
You could argue that responsibility goes
4:51
to the top, that what applies to Rachel
4:53
Reeves must apply to K Star, and of
4:55
course it should, but he will pay the
4:56
price in the polls and in the total
4:58
breakdown of support for this
5:00
government. Reefs has said that she
5:01
won't resign if she breaks her election
5:03
manifesto promises. She said, "I am not
5:06
going to walk away because the situation
5:07
is difficult. I was appointed as
5:09
chancellor to turn our economy around
5:11
and I'm absolutely determined to finish
5:13
that job."
5:15
Well, God help us all. That's it from me
5:18
this week. Stay up tod date and in the
5:20
know with the city app and on city.com.
5:22
And I will be back next week as we inch
5:25
even closer to that budget day.
5:28
[Music]
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