Rachel Reeves insists she will break tax pledge but lift two-child limit | Politics News

Britain is set to face its next autumn budget in the next few weeks, which could see tax rises and remove the two-child allowance limit.

Rachel Reeves is preparing to announce the fall budget on November 26, and rumors are circulating about what changes it will bring to people’s wallets and the economy.

The Chancellor yesterday suggested he would raise taxes despite Labour’s election manifesto promising not to increase income tax, employees’ national insurance or VAT.

He warned that not raising taxes on workers would only result in ‘major cuts’ to public investment, which could hamper economic growth.

However, he also signaled openness to eliminating the two-child allowance limit, which activists say could lift 350,000 children out of poverty. He said children ‘should not be punished because their parents don’t have much money.’

Reeves also warned that global instability, sparked by Donald Trump’s tariffs and the ongoing war in Ukraine, as well as a sudden downgrade of economic forecasts by the UK watchdog, could force him to make difficult choices.

Reeves told BBC Radio 5 Live: ‘I will make a choice in the Budget.

“Of course we can stick to manifesto commitments, but this requires things like big capital spending cuts and the reason why our productivity and growth has been so poor in recent years is because the government has always taken the easy option of cutting investment – ​​in rail and road projects, energy projects and digital infrastructure.

“And as a result, our productivity has never returned to what it was before the financial crisis.

‘So we always have a choice to make, and what I promised during the election campaign was to restore stability to our economy, and what I can promise now is that I will always do what I think is right for our country.’

But he warned that a final decision had ‘not yet been taken’.

He said the downward revision of UK productivity by the Office for Budget Responsibility was based on the country’s performance ‘in recent years under the last government’ to make a forecast for the future.

Commenting on the controversial two-child allowance limit, the Chancellor said it was vital not to allow ‘the impact on our economy of allowing child poverty to go unchecked.’

He said: ‘There are lots of different reasons why families change shape and size over time, and I don’t think it’s right that a child is punished because they’re in a larger family through no fault of their own.

‘So, we will take action against child poverty. The last Labor government proudly reduced child poverty and we will reduce child poverty too.’

Shadow Chancellor Sir Mel Stride accused Reeves of ‘trying to pull the wool over your eyes.’

‘Every time the numbers don’t increase, Reeves blame others. But this is a matter of choice – and the Chancellor made the wrong choice,’ he said.

The two-child allowance limit, which prohibits parents from claiming child tax credit or universal credit for more than two children, was introduced by the Conservative government in 2017.

Other tax measures that Reeves is rumored to be considering include replacing stamp duty with property tax, and a new tax of 3p per mile on electric vehicles.

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