Conservative response to Rachel Reeves embargoed Mansion House speech

Sir Mel Stride MP, Shadow Chancellor of the Exchequer, said:

“'Rachel Reeves should have used her speech this evening to rule out massive tax rises on businesses and working people. The fact that she didn't should send a shiver down the spine of taxpayers across the country. 

'For months, major forecasters have warned that Labour's botched tax hikes would damage economic growth, but now despite saying she would not have to come back for more its clear this failing chancellor is planning to do just that. 

‘Conservative know we will only grow the economy by backing the makers, the people who work hard, create wealth and jobs, and fund public services. Only the Conservatives will unpick Labour's damage and fix their mistakes.'

ENDS

Notes to Editors:

More tax rises are coming despite Rachel Reeves assurances she was ‘not coming back' with more tax hikes:

• After her Autumn Budget, Rachel Reeves said she is ‘not coming back' with more tax rises – a promise she is preparing to break. Speaking to business leaders Reeves said: ‘I'm really clear, I'm not coming back with more borrowing or more taxes'. However, when asked whether she was prepared to rule out tax rises after the welfare U-turn, Rachel Reeves said: ‘I'm not going to, because it would be irresponsible for a chancellor to do that. We took the decisions last year to draw a line under unfunded commitments and economic mismanagement. So we'll never have to do something like that again. But there are costs to what happened' (The Guardian, 4 July 2025, link; BBC News, 25 November 2024, link; GB News, 11 June 2025, archived).

• Keir Starmer has not ruled out reversing Conservative plans to end the Personal Allowance freeze – despite Rachel Reeves admitting that an extension would breach Labour's manifesto promises. When asked whether the Government remained committed to ending the personal allowance freeze, Keir Starmer said: ‘Mr Speaker, no Prime Minister or Chancellor are going to write a budget (inaudible)'. In the Autumn, Rachel Reeves said: ‘I am keeping every single promise on tax that I made in our manifesto, so there will be no extension of the freeze in income tax and national insurance thresholds beyond the decisions made by the previous Government' (Hansard, 9 July 2025, Vol.770 Col.938, link; Hansard, 30 October 2024, Vol. 755 Col. 822, link). 

• Keir Starmer has not ruled out new taxes on homes, pensions and savings. When Kemi Badenoch questioned Keir Starmer on the introduction of a Wealth Tax, Starmer said: ‘The right hon. Lady says that we should not be asking them for advice on the economy. She is absolutely right about that; we will not be asking for their advice'. Stuart Adam, senior economist at the IFS, noted a ‘Wealth Tax' could ‘raise significant revenue if it applied to the bulk of the UK's wealth – that would include the homes and pensions of the middle class' (Hansard, 9 July 2025, Vol.770 Col.939, link; Tom Waters, Twitter, 8 July 2025, link).

Uncertainty over taxes is causing concern among investors:

• Sir Howard Davies, chairman of NatWest, warned that ‘considerable uncertainty about the future tax burden' is concerning investors. STUDIO: Overall, does this paint a picture of a Chancellor who is creating a stable environment for investors and for growth in the country? DAVIES: ‘Well, the problem is, of course, that we don't just have this to look at. We have all kinds of other changes. And indeed, the failure to implement any welfare reform is the thing that worries financial markets the most, because what they see is a tight fiscal position. And that is about the balance between taxing and spending. And they see a government that has failed to introduce any of the spending reductions that it said it would introduce. Therefore, people think the only other. Way of squaring that circle is by increasing taxes. Therefore, there is considerable uncertainty about the future tax burden. That consideration, I think, dominates all these other changes' (BBC Radio 4 Today, 15 July 2025, archived). 

Labour are not being honest with the British people: 

• Rachel Reeves will say Labour have ‘[put] the public finances back on a stable footing' – but Richard Hughes, Chairman of the OBR, said ‘if you leave the public finances on autopilot with existing policy settings' debt would reach 270 per cent of GDP. ‘I think the issue is that they need to understand the sort of choices and trade-offs they face Because we've currently got debt of a hundred percent of GDP. If you leave the public finances on autopilot with existing policy settings, that goes up to 270 per cent of GDP. The UK has never had debt of that level in its recent past. And so it is a trajectory it can't sustain' (OBR Press Conference, 8 July 2025, archived; HM Treasury, Mansion House speech, 15 July 2025, archived).

• Rachel Reeves will say ‘real wages up by more in the first ten months of this government than in the first ten years of the previous government' but wage growth was higher in each of the four years before Labour came to office. Earnings growth (including bonuses) was higher than in 2025 – 5.3 per cent – than in 2021, 2022, 2023, and 2024 – 5.6 per cent, 6.8 per cent, 6.5 per cent, and 5.9 per cent (ONS, Average weekly earnings in Great Britain: June 2025, 10 June 2025, link).

• Labour claim Britain will ‘become the top destination for finance firms', but the London Stock Exchange (LSE) has lost £132 billion of listings to foreign companies since Labour came to power. Labour claim their reforms ‘will see Britain become the top destination for finance firms over the next decade, attracting inward investment from across the globe to create good, skilled jobs around the country'. However, since the election, £132 billion of listings on the LSE have been cancelled or moved abroad including a £37 billion listing from Shein, a £38 billion listing by Unilever and a £33 billion listing by Revolut (HM Treasury, Press Release, 15 July 2025, link; Conservative Research Department Analysis, accessed 1 July 2025 (available on request).

• Labour claim Britain is experiencing ‘record investment,' yet under Rachel Reeves, Foreign Direct Investment projects have dropped to a historic low. Keir Starmer said: ‘The Leader of the Opposition comes here every week to talk the country down, but that record investment—£120 billion—will mean good, well-paid jobs across the country. This investment is from foreign investors who can choose whether to invest in this country; they are choosing to invest in this country now, because they have confidence in what this Government are doing'. However, only 1,555 Foreign Direct Investment projects took place in 2023-24 compared to 1,375 in 2024-25, a drop of an eighth, or 12 per cent. This is the lowest level recorded of FDI projects recorded by the government (Hansard, 9 July 2025, Vol. Col. 770 938, link; DBT, Inward Investment Results, 26 June 2025, link).

• Labour claim they are reducing ‘red tape', but their Plan to Make Work Pay will burden businesses with over 70 radical 1970s-style regulations, imposing £4.5 billion of costs on employers. Labour's financial services strategy says: ‘Red tape holding back the competitiveness of the UK financial sector will be swept away under the Leeds Reforms, addressing long-standing industry complaints' However, Labour's Plan to Make Work Pay will put over 70 new French-style regulations or requirements on businesses – at a cost to business of £4.5 billion a year (HM Treasury, Press Release, 15 July 2025, link; The Labour Party, Plan to Make Work Pay, 24 May 2024, link; The Daily Telegraph, 24 May 2024, link; DBT, Employment Rights Bill, October 2024, link; Electoral Commission, 11 November 2024, link).

• Labour claim they are ‘restoring Britain's reputation as a beacon of stability', but Rachel Reeves has faltered constantly in her approach and was forced abandon her proposed ISA tax hike following strong opposition from building societies. ‘Rachel Reeves appears to have U-turned on a reported plan to reduce the £20,000 tax free cash ISA allowance. The Chancellor was widely expected to announce a cut during a speech at Mansion House on July 15. But a fierce backlash from building societies and consumer champions such as Martin Lewis has forced Ms Reeves into a rethink' (The Express, 11 July 2025, link).