The Chancellor on Monday insisted she will stand by her pledge not to increase taxes on “working people” in her upcoming Budget - but left the door open to changing VAT rules in a bid to boost Treasury coffers.
Rachel Reeves faces having to plug a £40billion black hole in the nation’s finances when she lays out her economic plans in November.
Ahead of her speech at the Labour Party conference in Liverpool on Monday, Ms Reeves vowed to stand by her fiscal rules and her pledge not to raise taxes on working people, despite rising borrowing costs.
“Borrowing costs for all economies, certainly at the long end of the curve, have gone up, often significantly, and we're not immune to that in Britain as an open trading, economy,” she told Sky News.
"But those manifesto commitments we made 15 months ago, those commitments stand, and the reason we made those commitments was because working people had been the ones that bore the brunt of the economic mismanagement of the previous government.
"I want to make working people better off, which is why we made those commitments and why we stand by those commitments that we made in the manifesto."
However, Ms Reeves dodged questions on rumours that the government is considering changes to value added tax (VAT).
Ms Reeves did not answer questions on the 20% levy added to most products and services sold by businesses.
She said that she would “never play fast and loose with the public finances because it has consequences for working people".
But also acknowledged that "the prices in the shops are central to people's living standards".
In her party conference speech on Monday, Ms Reeves will make the case for a society founded on “contribution” as she unveils plans for a “youth guarantee” aimed at driving down unemployment.
The Chancellor is expected to say Britain must be built on the principles of doing “our duty for each other” and “hard work matched by fair reward” in a speech to Labour's annual conference.
Under plans to be announced on Monday, every young person who has received universal credit (UC) benefits for 18 months without “earning or learning” will be guaranteed an offer of paid work.
Claimants will face sanctions such as losing their benefits if they refuse to take up jobs under the scheme without a reasonable excuse.
The guarantee, which will be overseen by Work and Pensions Secretary Pat McFadden, forms part of a pledge of “nothing less than the abolition of long-term youth unemployment”, Ms Reeves will say.
The Chancellor is expected to say: “I believe in a Britain founded on contribution - where we do our duty for each other, and where hard work is matched by fair reward.
“I believe in a Britain based on opportunity - where ordinary kids can flourish, unhindered by their background.
“And I believe that Britain's real wealth is found not only in the success of the fortunate few, but in the talents of all our people, in every part of our great country.”
The focus on “contribution” comes amid concerns among some in Labour that the Government needs to offer voters a clearer vision of its agenda.
Sir Keir Starmer has previously avoided using buzzwords to define his politics, but influential think tank Labour Together published a paper last week in which it argued the concept of contribution should be put at the heart of policy-making.
Ms Reeves is expected to add: “We won't leave a generation of young people to languish without prospects - denied the dignity, the security and the ladders of opportunity that good work provides.
“Just as the last Labour government, with its new deal for young people, abolished long-term youth unemployment I can commit this Government to nothing less than the abolition of long-term youth unemployment. We've done before and we'll do it again.”
This article was written by Rachael Burford from The Evening Standard and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.
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