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Rachel Reeves Warns he will have to cut taxes again before the next election If it breaks its main manifesto pledge and increases In Budget,
sir tony blairThe think tank also said that any tax increases, such as increasing VAT or income tax, should be coupled with pro-business policies to break the UK’s “tax-and-spend destruction loop”.
warning comes after chancellor Keep country on notice That manifesto-expose comprehensive tax increases Coming later this month, he said during an unprecedented pre-Budget address that “we all have a contribution to make”.
The Tony Blair Institute has now called for any major tax increases to be temporary, and warned that Labor should move towards “targeted tax cuts” before the next election “once growth has strengthened and public service reforms have delivered results”.
The group also called on the Chancellor to bring back businesses that were “hurt” by last year’s Budget, with measures that move ahead of the “cautiousness of the Government’s first year in office”.
The Tony Blair Institute for Global Change (TBI) said any tax-raising measures should be paired with pro-business reforms that embed growth rigorously into every major policy decision, making the UK a better place to invest, work and build.
It warns: “If the Chancellor opts for a major revenue-raising step – particularly a manifesto-violating increase in income tax or value-added tax (VAT) – she should make clear that this is temporary and conditional: a short-term measure to stabilize the public finances, not a permanent change in direction.”
It said that, as growth returns and public sector reforms take effect, the priority should be to reverse these increases – “transforming short-term discipline into a foundation of recovery and pre-election tax cuts”.
The TBI said in its paper that planned changes to migration policy and employment rights risk damaging the UK’s flexible employment market.
It urged ministers to retain the five-year route to permanent settlement for skilled worker visas, instead of requiring migrants to spend a decade in the UK before applying.
It also recommends expanding access and reducing the cost of global talent visas, introducing a new “technical excellence” visa for engineers, founders and researchers, and creating a permanent key worker visa for shortage occupations such as construction and caregiving.
Tom Smith, director of economic policy at the Tony Blair Institute, said: “The Chancellor accepts that she has difficult choices to make. She cannot satisfy the market, the party, business and the electorate all at once. The only way to do this over time is to get Britain back on the path to growth – and that means a new deal between government and business.
“A credible budget can’t just raise taxes – it must raise Britain’s focus. The government needs to show fiscal discipline, but also the confidence to support business.”
It comes as the CBI warned against “tax deaths by thousands” in a new report and said “every decision” taken by the Chancellor will help stimulate economic growth.
“Tough choices must be made – without leaving the door open to further unwanted tax changes in the spring,” the organization representing thousands of businesses said in presenting its budget to the Treasury.
It states: “Death by the thousands in taxes is not a reliable way to deliver a thriving, prosperous economy.”
It said nothing should be considered “off-the-table”, including unpopular steps in areas such as personal taxes, public spending, welfare provision and pension increases.
He also called on the government to accelerate critical infrastructure and use technology to modernize the economy.
Ryan Newton-Smith, chief executive of the CBI, said: “Tiggling every year to close an ever-widening fiscal gap is not a viable approach to a challenge of this magnitude.
“We need to take tough decisions now or risk a downward spiral whereby we will rob Peter only to pay Paul to meet normal government spending and jeopardize our growth prospects.
“Short-term thinking leads to long-term decline, let’s not make this a political choice we may regret.”
He said that sticking strictly to manifesto commitments “may be politically laudable, but it is only economically viable if material conditions remain unchanged. The fact is that they are not. Tax rises and spending cuts are unpopular, but the reality is that the Chancellor has little choice.”
Reeves warned Tuesday that “each of us must do our part” and warned that there are “tough choices” ahead. She indicated she was ready to break up Labour’s key manifesto is a commitment not to raise income tax, Personal National Insurance or VAT.
on weekends, Independent Ms Reeves faces a Cabinet response if she breaks her pledge to voters.
The Treasury has been contacted for comment.