Conservative response to Rachel Reeves’ conference speech

Monday, 29 September 2025 13:33

Sir Mel Stride MP, Shadow Chancellor, said: “Rachel Reeves says she won't risk the public finances, but she's already doing that - with more borrowing, higher spending, and more taxes. Labour has raised taxes by £40 billion per year, including a £25 billion tax on jobs, and now won't rule out coming back for more. “Labour refuse to tackle rising welfare costs and won't commit to keeping the two-child benefit cap - just like Reform. Labour spends more, taxes more,...Request free trial

Sir Mel Stride MP, Shadow Chancellor, said:

“Rachel Reeves says she won't risk the public finances, but she's already doing that - with more borrowing, higher spending, and more taxes. Labour has raised taxes by £40 billion per year, including a £25 billion tax on jobs, and now won't rule out coming back for more.

“Labour refuse to tackle rising welfare costs and won't commit to keeping the two-child benefit cap - just like Reform. Labour spends more, taxes more, and blames others when things go wrong. Under them, nothing is safe - not your job, savings, or pension.

“Only the Conservatives, under new leadership, will support business, control welfare, and live within our means to build a stronger economy.”

ENDS

Notes to Editors

Rachel Reeves increased taxes by £40 billion a year- meaning that the tax burden will reach a ‘historic high' of 37.7 per cent of GDP. Rachel Reeves raised taxes by £40 billion a year in her first Budget, having only set out £7 billion in manifesto tax plans. In the March 2025 Economic and Fiscal Outlook, Office for Budget Responsibility (OBR) said taxes would rise from 35.3 per cent of GDP to a ‘historic high' of 37.7 per cent in 2027-28 (OBR, Economic and Fiscal Outlook, 26 March 2025, link; The Labour Party, Labour's fiscal plan, 13 June 2024, link).

Despite Labour's manifesto ruling out taxes on ‘working people', Rachel Reeves introduced a Jobs Tax – a tax hike that will be paid for ‘largely [by] working people' according to the independent IFS. Labour's manifesto reads: ‘Labour will not increase taxes on working people, which is why we will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT'. However, Labour increased employer National Insurance from 13.8 per cent to 15 per cent. Paul Johnson, then Director of the IFS, said Labour's employer National Insurance hike would be paid for ‘largely [by] working people' (The Labour Party, Change, 13 June 2024,link; IFS, IFS Initial Response to Autumn Budget 2024, 30 October 2024, link).

Rachel Reeves then changed the fiscal rules to increase borrowing to a record high – breaking her promise not to ‘fiddle the figures'. Despite promising not to ‘fiddle the figures', in the Autumn, Rachel Reeves announced a new fiscal rule – public sector debt net of financial liabilities – meaning that public sector net debt is expected to reach 96.1 per cent of GDP by 2029-30 - the highest level seen outside the pandemic since 2010 (OBR, Economic and Fiscal Outlook, 26 March 2025, link; HM Treasury, Autumn Budget 2024, 30 October 2024, link; Bloomberg, November 2023, link; Philip Aldrick, Twitter, 3 August 2024, link).

As a result of Rachel Reeves' decisions, the UK is now spending £100 billion annually on debt interest – with these payments projected to reach £130 billion by 2030. According to the Office for Budget Responsibility, debt interest is expected to increase year on year, reaching £131.6 billion by 2029-30 (OBR, Economic and Fiscal Outlook, 26 March 2025, link).

Despite claiming to have ‘fixed the foundations', Rachel Reeves was forced to return to the House with an Emergency Budget after economic instability threatened to erase her headroom. Despite claiming to have ‘fixed the foundations of the economy' in the Autumn Budget, Rachel Reeves was forced to unveil £4.8 billion of welfare cuts in her Emergency Budget, blaming ‘global developments' for her headroom evaporating (HM Treasury, Autumn Budget 2024, 30 October 2024, link; HM Treasury, Spring Statement 2025, 26 March 2025, link).

However, Rachel Reeves failed to Labour MP's of the need to reduce welfare spending, resulting in a humiliating U-turn for Labour. According to The Telegraph, Rachel Reeves was ‘dispatched as part of a ministerial team to convince MPs to vote for the softer plans'. However, the Government only won the vote after gutting most of the Bill's measures at the eleventh hour (The Telegraph, 2 July 2025, link; BBC News, 1 July 2025, link).

Now, senior Labour figures – including deputy leadership contender Lucy Powell – have joined the chorus demanding the removal of the two-child benefit cap, despite the £3.5 billion annual cost. Lucy Powell has openly called for the cap to be scrapped, echoing interventions from Rachel Maskell and Dianne Abbott among others, while Bridget Phillipson branded the policy ‘spiteful' and said removing it is ‘on the table'. On 24 September, The Times reported that Starmer will be told by the Child Poverty Taskforce that scrapping the cap is the single most effective way to reduce child poverty – despite the Resolution Foundation estimating the policy would cost £3.5 billion a year (The Times, 24 September 2025, link; BBC News, 19 September 2025, link; The Sun, 17 September 2025, link; The Resolution Foundation, Press Release, 12 May 2025, link).