Chancellor Rachel Reeves has defended the government’s £40bn package of tax increases unveiled in last autumn’s budget, stating that the move enabled a vital £25bn investment into the NHS — which she credits for reducing hospital waiting lists over the past five months.
Speaking to MPs this week, Reeves addressed concerns over the sharp rise in national insurance contributions (NICs) for employers, which comes into effect on 6 April. The tax hike is part of a wider fiscal shift that includes freezes to income tax thresholds and rising household bills, with the Resolution Foundation estimating that the average household will be £400 worse off in the coming tax year.
“If we hadn’t raised taxes, NHS waiting lists would be higher today,” Reeves argued. “We chose to prioritise investment in the health service — and that was the right decision.”
In response to criticism, particularly from Conservative MP Harriett Baldwin, Reeves acknowledged the political divide on tax and spending but added: “If you want extra money for public services, you have to support the taxes to pay for it.”
Business groups have warned that the combination of the NICs rise and a 6.7% increase in the national living wage could result in job losses. However, Reeves dismissed fears of a significant downturn in the labour market, citing data showing wage growth outpacing inflation and vacancies remaining steady.
Economist Adam Corlett of the Resolution Foundation warned that the new tax year would bring “even larger bill increases, and benefits that aren’t keeping pace with the rising cost of living.” The thinktank is urging the government to fast-track a planned 2% increase in universal credit payments to help struggling households.
Reeves also highlighted long-term changes to fiscal rules, enabling higher capital investment than was planned under former chancellor Jeremy Hunt. “The biggest long-term impact we’ve made is unlocking and maintaining capital spending,” she told MPs.
The tax rises and spending plans come at a time of economic pressure for UK households — but Reeves insisted that the strategy was necessary to maintain public services, support economic recovery, and build long-term growth.
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