A bullish Rachel Reeves today dismissed business anger over her monster Budget tax raid by insisting no-one has any better ideas.
The Chancellor acknowledged anxiety about the impact of the measures in her bombshell fiscal package as she was grilled at the CBI conference.
But she swiped: ‘What I haven’t heard are many alternatives.’
Ms Reeves said she was ‘proud’ that she had ‘dealt with the problems’ and suggested it would be the last major tax hike this Parliament – despite fears Labour will need even more cash.
The intervention came after the business group’s conference was dominated by alarm over the £25billion hike to employer National Insurance.
A survey of members has found that half are now looking to cut jobs, while two-thirds are slashing recruitment plans.
Earlier, CBI chief executive Rain Newton-Smith insisted industries such as retail and hospitality have been pushed into ‘crisis containment’.
Other sectors are now focusing on ‘damage control’ rather than investment following the hit to their bottom line, she added.
Ms Newton-Smith reminded Ms Reeves that profit is ‘not a dirty word’ and growth is impossible unless business is allowed to prosper.
Rupert Soames, the CBI chair, said it was clear that ‘business has been the cash cow and it’s been milked’.
Salman Amin, chief executive of McVitie’s bakery products’ parent company Pladis, cautioned that it is ‘becoming harder to understand’ the case for investing in the UK.
Chancellor Rachel Reeves acknowledged anxiety about the impact of the measures in her bombshell fiscal package as she was grilled at the CBI conference
CBI chief executive Rain Newton-Smith insisted industries such as retail and hospitality have been pushed into ‘crisis containment’
Closely-watched PMI figures have suggested that activity across the UK’s private sector contracted in the first weeks of November amid a drop in firms’ confidence
Businesses bore the brunt of £40billion of tax rises unveiled by the Chancellor last month.
Some firms also face rising costs as a result of an increase in the minimum wage and new employment rights.
But Ms Reeves defended her Budget measures this afternoon, telling the CBI conference the ‘difficult decisions’ had provided the ‘stability and the platform that we need to move forward’.
‘If I hadn’t have made those difficult decisions, then we wouldn’t have been able to bring the stability back to the economy that is desperately needed,’ she said.
‘We have now drawn a line under the inheritance that I faced.
‘Public finances are now on a firm footing, and also our public services are funded in a proper way, and we’ve now set the envelope for those public services for the rest of this Parliament, which means we’re not going to have to come back for more.’
Amid the business backlash at her Budget, the Chancellor added: ‘I’ve heard a lot of feedback. What I haven’t heard are many alternatives.’
Ms Reeves also told business leaders she would not be coming back with more borrowing or taxes.
Asked if she could confirm there would be no more big tax rises on businesses, she said: ‘I faced a problem, and I faced into it, and we have now drawn a line under the fiction peddled by the previous government.
‘We’ve put our public finances back on a firm footing, and we’ve now set the budgets for public services for the duration of this Parliament.
‘Public services now need to live within their means because I’m really clear, I’m not coming back with more borrowing or more taxes.’
In her own conference speech, Ms Newton-Smith welcomed the political stability brought by Labour’s huge majority but warned that the Government’s vision for growth remains ‘in the distance’.
Ms Newton-Smith said business had been ‘caught off guard’ by the scale of the changes to employers’ National Insurance.
‘Profits aren’t just extra money for companies to stuff in a pillowcase,’ she said.
‘Profits are investment. When you hit profits, you hit competitiveness, you hit investment, you hit growth.’
Ms Reeves has declared that economic growth is her ‘top priority’ and insisted Labour will meet its manifesto pledge to make the UK the fastest growing economy in the G7.
But the Office for Budget Responsibility downgraded its growth forecasts for the final years of the decade in the wake of the Budget.
Official figures covering the first three months of Labour’s tenure show growth fell to 0.1 per cent, down from 0.5 per cent the previous quarter.
Sir Keir Starmer acknowledged the growth figures were ‘not good enough’ and pledged to redouble efforts to boost investment.
Ms Newton-Smith also warned that the Budget has placed a ‘heavy burden’ on businesses looking to invest.
‘When firms I speak to want to be creating more opportunities, more investment, more training in their local communities… instead so many – especially in retail and hospitality – have gone into crisis containment,’ she said.
‘Even where the risk isn’t critical, firms that have been through really tough years are now in damage control again.
‘They are looking with heavy hearts to cut training and investment, delay decarbonisation projects, or pass on costs to customers.’
The CBI’s warning is the latest to raise concerns about Labour’s stewardship of the economy.
A monthly business survey has suggested that activity across the UK’s private sector contracted in the first weeks of November amid a drop in firms’ confidence.
Retailers including Tesco, Sainsbury’s and Marks & Spencer also say they will face a £7billion hike in their costs due to the Budget policy changes and that job losses are ‘inevitable’.
Keir Starmer in Downing Street today as the business backlash rages
Responding to the Chancellor’s speech at the CBI conference, Tory shadow chancellor Mel Stride said: ‘Rachel Reeves has some gall to stand in front of business leaders and suggest that she is on their side.
‘Labour’s National Insurance jobs tax will punish businesses across the country – making it harder for them to create jobs, driving down wages and discouraging investment.
‘Thanks to Labour’s choices, independent forecasts are predicting growth slowing, inflation rising and borrowing soaring.
‘It is clear all Rachel Reeves has delivered so far is a litany of broken promises.’
John O’Connell, chief executive of the TaxPayers’ Alliance, said: ‘The frosty reception that the Chancellor faced should make it clear to her that business owners aren’t buying her bluster about black holes and fiscal responsibility.
‘While Reeves has been busy tinkering with her CV, already hard-pressed entrepreneurs have been sounding the alarm about the damaging effects of her employer’s national insurance hike on jobs, investment and growth.
‘The Chancellor should recognise that her talk is cheap but the taxes she has hiked on businesses are crippling.
‘If she is serious about her growth agenda she needs to reverse the increase in employers’ National Insurance.’