Prime Minister and Chancellor face resistance from ministers as they prepare for a challenging October Budget, tackling a £22bn fiscal gap while balancing Labour’s priorities

Keir Starmer and Rachel Reeves are locking horns with several senior ministers as they finalise plans for significant public spending cuts in the October 30 Budget. With fiscal pressure mounting and a £22bn hole in the public purse, the Prime Minister and Chancellor have found themselves confronting unrest within their cabinet as they prepare for a “grim” year ahead in terms of finances.

While some ministers are calling for a softer approach, departments across key sectors, including health, justice, local government, and defence, have been warned to brace for tough curbs. Reeves, with Starmer’s full backing, has taken a firm stance, defending the need to rein in spending and protect Labour’s long-term ambitions. Ministers, however, have expressed concerns that these cuts could undermine the government’s stated goal of stimulating economic growth.

One government adviser pointed out the contradiction, noting, “The primary mission of this government is to grow the economy. Yet, some of these cuts are directly contrary to that mission. They will have tangible consequences for people’s lives and the country’s broader objectives.”

THE NEW STATESMAN

Rachel Reeves, Britain’s first female Chancellor, faces a pivotal moment with her upcoming Budget. In an interview with Andrew Marr, Reeves reflects on the massive fiscal challenges left behind by the Conservatives, emphasising that the country was on the verge of economic collapse in July. Despite this dire inheritance, Reeves remains calm and focused, acknowledging the need for significant tax increases to rebuild the economy.

Reeves is caught between two opposing forces: the insufficient revenues available to the government and the increasing demands for public services and welfare support. Rich Britain is concerned about potential hikes in capital gains tax, inheritance tax, and taxes on the non-domiciled, while social democrats are eager for a clear path to recovery and rebuilding. The Chancellor acknowledges that “those with the broadest shoulders” will bear the greatest tax burden, implying a focus on wealthier individuals and businesses.

As Reeves prepares for her first major fiscal statement, the stakes are high. This Budget has the potential to define the future of the Labour government and determine whether it can deliver on its promises to avoid austerity while fostering economic growth. With the country’s broken economy in desperate need of repair, Reeves must navigate a delicate balance between fiscal responsibility and public expectation.

The Chancellor’s ability to successfully implement her economic vision will not only impact the Labour Party’s standing but also decide whether Britain can move beyond the economic turmoil of recent years.

THE GUARDIAN

Tensions are rising within the Labour government as cabinet ministers contest Chancellor Rachel Reeves’ proposed £40bn in tax increases and spending cuts ahead of the 30 October budget. Reeves aims to fill a £22bn shortfall she claims was left by the Conservatives, but she is also seeking additional savings to prevent real-terms cuts to public services. Ministers from key sectors, including housing and transport, have expressed discontent, with several writing directly to Prime Minister Keir Starmer to challenge the depth of the cuts.

The Guardian previously revealed that ministers were frustrated by demands to slash capital spending, despite Reeves’ public commitment to invest more in infrastructure and stimulate economic growth. While Reeves has vowed there will be “no return to austerity,” she has informed the cabinet that the UK faces a £100bn gap over the next five years.

During a political cabinet meeting on Tuesday, Reeves emphasised that the £22bn deficit she uncovered upon taking office was only enough to maintain the status quo in public services, rather than driving new growth. The chancellor is now under pressure to identify £40bn worth of adjustments to avoid further budget shortfalls, which would require difficult choices regarding welfare, taxes, and spending.

Labour has pledged not to raise income tax, VAT, or National Insurance (NI) for working individuals, limiting their options for revenue generation. Reeves and Starmer have hinted at increasing employer NI contributions and potentially applying NI to employer pension contributions, a move that business leaders warn could amount to a “tax on jobs.”

As the budget approaches, cabinet divisions over spending priorities could undermine the government’s economic plans, with the chancellor’s balancing act between fiscal responsibility and growth proving increasingly precarious.

THE TELEGRAPH

The cracks are beginning to show. Rachel Reeves and Sir Keir Starmer’s narrative, which claims the Labour government is addressing an inherited economic disaster, is falling apart. Allister Heath lays bare the chancellor’s colossal breach of trust and the government’s slide towards authoritarian-style deception, with Reeves planning what may be the largest tax hike in peacetime history.

Labour’s claims of a “black hole” in public finances have ballooned from £22bn to £40bn, now approaching £50bn. The root of the issue is not an unavoidable crisis but a political choice to grow the public sector without admitting the cost. Reeves’ tax increases are not driven by fiscal necessity; instead, they reflect an aggressive, ideological desire to reshape Britain. By inflating the supposed deficit, Labour is laying the groundwork for tax hikes that could cripple the private sector while expanding government power.

Unlike George Osborne’s response to the financial crisis, Reeves’s fiscal tightening is voluntary, driven by her unwillingness to allow the private realm to flourish. She dismisses options like promoting private health insurance and scaling back welfare spending, favouring a far larger state at the expense of taxpayers. Her refusal to cut real-terms spending leaves no option but for taxes to rise.

Labour’s manifesto pledge not to raise taxes on “working people” has also become hollow. Reeves has slyly redefined this promise, suggesting that the pledge only applies to employee National Insurance contributions, not the sums businesses pay. This betrayal has serious implications for workers, who will ultimately bear the cost of any tax hikes on employers through lower wages and higher prices.

The party’s true intentions—championing a collectivist agenda—are becoming clearer by the day. Despite token cuts like removing pensioners’ winter fuel allowance, Labour’s assault on private enterprise and investors is unmistakable. Its policies are cloaked in a language of fairness, but the reality is a far more dystopian vision: one where economic productivity is stifled and individual achievement is punished.

In the coming weeks, Reeves is expected to announce a budget that could shatter Britain’s economic future. Her tax increases will burden the country’s most productive people, while her government tries to spin its actions as a moral necessity. Heath concludes with a grim prediction: Reeves’s tax hikes will be just the beginning, and her fabrications won’t stop until Britain has fully surrendered to her vision of state control.