2 weeks Ago By Nina Lloyd
Rachel Reeves will be grilled by MPs on Wednesday over a series of tax hikes and increased spending unveiled in the autumn Budget . A change to the UK’s debt rule that was announced to unlock billions in borrowing is also likely to come under scrutiny as the Chancellor appears before Parliament’s Treasury Select Committee . Ms Reeves used October’s financial statement to confirm an increase to employer national insurance contributions, changes to inheritance tax rules for farmers and a rise in the minimum wage.
Taxes were raised to a historic high, with £40 billion extra a year in revenue used to pour into schools, the NHS, transport and housing. The Budget was constrained by two self-imposed “fiscal rules” – for day-to-day spending to be funded through taxation, and for debt, measured by the new yardstick of “public sector net financial liabilities”, to be falling as a share of GDP. It comes amid anger from farmers over a decision to raise a tax of 20% on the value of inherited farming assets above £1 million.
While this still represents a relief of 50% compared with the standard rate, farming unions and opposition critics have argued the move will make food production harder and render Britain more reliant on imports. The cross-party Treasury Select Committee, chaired by Labour MP Dame Meg Hillier, said it would “examine whether the Chancellor’s new fiscal rules are right for the health of the UK economy and changes to spending, taxation and debt”. Permanent secretary of the Treasury James Bowler and senior Treasury officials Will Macfarlane and Conrad Smewing will also appear before MPs to answer questions on Wednesday.
On Tuesday, the committee was told by the fiscal watchdog that the previous government may have failed to follow legal obligations around providing information to the independent forecaster as it compiled its March predictions. Chairman of the Office for Budget Responsibility (OBR) Richard Hughes said he thought there may have been a “misunderstanding” about the law after the watchdog was not made aware of £9.5 billion in spending pressures ahead of the fiscal statement in March.
The OBR said its judgment on spending would have been “materially different” had it had access to this information..
