Speech aimed to prepare voters and markets for tax rises, never mind the size of their shoulders

There were two audiences for Rachel Reeves's hastily arranged speech yesterday: the financial markets, and Labour's disillusioned voters.

- Heather Stewart

As the chancellor made clear, though only obliquely, the government was considering abandoning its pre-election pledge not to raise income tax, backed into a corner by dire forecasts from the Office for Budget Responsibility (OBR). No chancellor has raised the basic rate since Labour's Denis Healey in 1975.

Reeves hoped to explain to the public why it might be necessary - by pointing to the punishing costs of allowing public debt to keep rising - and to convince investors she is determined to wrestle the public finances under control.

It is extremely rare for chancellors to haul in journalists for a formal speech less than three weeks before a budget. But Reeves and her team are acutely conscious of how difficult a communications challenge they have ahead of them.

Reeves had hoped to stick to Labour's manifesto pledges not to touch income tax, VAT or national insurance, reaching instead for progressive "reforms" of the tax system that would raise more from those with the "broadest shoulders". But some in Labour were always sceptical about the politics of that and an OBR forecast at the worse end of the Treasury's fears has put the manifesto promises back in play.