UK (Parliament Politics Magazine) – Chancellor Rachel Reeves faces pressure from Labour ministers to loosen fiscal rules and fund manifesto promises ahead of the party conference.
As reported by The Telegraph, Rachel Reeves faces ministerial revolt, under pressure to scrap borrowing rules.
What are ministers asking Rachel Reeves to do about spending?
Labour figures are urging Rachel Reeves for more funding to meet manifesto pledges, warning that “austerity-lite” could benefit Reform UK leader Nigel Farage.
She faces a £30bn shortfall in public finances ahead of her November Budget, where tax rises and spending cuts are expected.
Ms Reeves’ tough borrowing rules, aiming to end the deficit by 2030, have angered ministers.
One minister said,
“Everybody is begging for the fiscal rules to be slackened so we have a bit more we can do in our portfolios, and lots of ministers have made that case to the Treasury.”
They added,
“After the reshuffle, there is a hope that they will see we can’t just do austerity-lite. They are going to have to start listening to us because there are just too many gaps that need to be filled.”
According to two government sources, Labour’s fiscal rules have been debated in recent Treasury meetings, with ministers calling for more relaxed borrowing limits.
Sources say ministers are raising concerns over Reeves’ fiscal approach and are worried about public backlash over further tax increases.
What did the new Ipsos poll reveal about Keir Starmer and Labour?
According to an Ipsos survey, Sir Keir Starmer hit record low approval ratings, while Ms Reeves ranks as the government’s least popular figure.
Nigel Farage’s Reform Party tops Labour by 12 points, attracting 34% public support compared with Labour’s 22%.
The party’s current rating is Labour’s lowest in Ipsos polling since 2009, ahead of former PM Gordon Brown’s historic loss.
How are Unite and GMB pressuring Labour on taxes and energy?
Unite warned that the “mega rich” have escaped tax increases under Labour and argued that “A wealth tax would in a small way begin to reset that balance.”
The GMB union, a key Labour backer, urges ministers to tackle gas costs or face potential factory shutdowns.
What did John McDonnell say on wealth taxes and inequality?
A Labour MP said scrapping the cap could serve as a “management tool” to maintain party unity and public satisfaction.
Labour MP John McDonnell was reinstated to the party earlier this week following his suspension last July over his vote against removing the cap.
He will attend the conference and host a Sunday fringe event urging Rachel Reeves to implement wealth taxes to curb billionaire influence.
Mr McDonnell added,
“Until and unless we have a government that will address this grotesque level of inequality in our society, we will never have the resources we need to end poverty and invest in the quality public services we need.”
What is Andy Burnham calling for on wealth taxes and the mansion tax?
Andy Burnham, Mayor of Greater Manchester, has called for wealth taxes on high-value lands and urged Rachel Reeves to reduce her dependence on bond markets.
His calls for wealth taxes have gained support from MPs, strengthening his position as a potential rival to Sir Keir, and he hinted a leadership challenge could come before May’s local elections.
Mr Burnham will attend the Labour conference and plans to push again for a “mansion tax,” higher council taxes, expanded social housing, and proportional representation.
What did Rachel Reeves say about wealth taxes, borrowing, and spending?
Rachel Reeves has opposed calls for wealth taxes and looser borrowing rules, telling ministers they must “keep spending under control” and “live within our means.”
She added,
“I do not think there is anything progressive about spending £100bn a year on paying off debts accrued by previous governments when I would rather be spending more of that money on cutting hospital waiting lists, tackling illegal migration and keeping our country safe.”
The Treasury is reportedly considering plans to reduce the Office for Budget Responsibility from two forecasts a year to one, amid concerns its “scoring” overly shapes Budget decisions.
Officials at the OBR have reportedly opposed the plan, warning that scrapping the spring forecast would reduce transparency in government spending.
Removing the two-child benefit cap would cost taxpayers £2.5bn per year, in addition to the £5bn already spent on Sir Keir’s June benefits reform rollback.
How did Labour Together propose giving London more powers to raise funds?
Labour Together called on the Treasury to give regional leaders more tax-raising powers, mainly for funding infrastructure.
Its report said,
“Richer areas like London should have the powers and incentives to fund their own infrastructure, freeing up central government funding for the parts of the country that can’t yet stand on their own two feet.”
The report added,
“London should have the toolkit that a city like Paris has to tax the businesses and households that will benefit from new infrastructure.”
What did the Government say about mayors’ spending powers and tax policy?
A Government spokesman stated, “Decisions on tax policy are for the Chancellor to make at the Budget. Mayors are already getting new powers to spend cash more flexibly so they can improve public services and invest in education.”
They added, “We’re kickstarting economic growth in partnership with them, so people in every part of the country have more money in their pockets.”
What is the mansion tax?
Mansion tax is an annual levy on expensive homes. The UK proposed an annual tax on homes over £1–2m to fund public services and reduce inequality.
Similar taxes exist in some US states and Catalonia, Spain, aiming to raise revenue, redistribute wealth, and discourage corporate property hoarding. The tax is designed to target high-value property owners and support funding for essential services like the NHS.