Reeves tax rises 'may be fiscal fiction'

Rachel Reeves was told yesterday that her plans for tax rises and spending restraint in the run-up to the next general election resembled a work of "fiscal fiction", as MPs expressed concern about the impact of her budget on their constituents.

- Heather Stewart Richard Partington Jessica Elgot

A day after the chancellor's statement, the Institute for Fiscal Studies (IFS) said she had chosen a high-risk strategy by backloading the squeeze to just before voters go the polls in 2029. Helen Miller, the thinktank's director, said the budget plans involved "near-heroic restraint in an election year" and suggested Labour could be forced to change course.

"[It is] a backloaded set of tax rises that almost entirely delay the pain.

It's reminiscent of the fiscal fictions of recent years. I hope this is a government able to deliver on its plans. But I have my doubts," she said.

The thinktank also raised questions about future plans for supporting children with special needs, after the Office for Budget Responsibility (OBR) identified what it said could be a £6bn funding shortfall.

The warnings came as Labour MPs in Westminster absorbed the potential impact of hefty future tax increases, albeit to fund measures many welcome, including the scrapping of the two-child benefit cap.

One backbencher said: "Our number one priority is supposed to be about getting the cost of living down. But this budget makes most of my voters poorer in an election year. Young people, who are going Green, are particularly screwed. I don't understand how this is supposed to work." Another warned: "It's been smartly designed to narrowly hit the landing zone between PLP [the parliamentary Labour party] and market kicking off.