Rachel Reeves has refused to rule out tax rises in the autumn budget, as she admitted the fallout over the Government's welfare Bill had been "damaging". The Chancellor warned there would be "costs to what happened", as she faced questions about how she would cover a shortfall left by the Downing Street climbdown on planned cuts to disability benefits.
The Government saw off the threat of a major Commons defeat over the legislation on Tuesday, after shelving plans to restrict eligibility for the personal independence payment (Pip) in the face of a backbench revolt. The original welfare proposals had been part of a package that ministers expected would save up to £5 billion a year.
Economists warn of tax rises
Economists are now warning that tax rises are likely to plug a gap left by the concessions to rebels. The fallout threatens to cause lasting damage to morale in Labour ranks, with some MPs calling for a reset in relations between the parliamentary party and the leadership before fractures widen.
Images of the Chancellor crying in the Commons on Wednesday also spooked the financial markets and led to questions about her future. However, a Treasury spokesman said the tears were the result of a personal matter and Downing Street said she would remain in post.
Chancellor defends her position
In an interview with the Guardian newspaper, Reeves said she had never considered resigning, adding: "I didn't work that hard to then quit." She said she had gone to Prime Minister's Questions because she "thought that was the right thing to do" but that "in retrospect, I probably wished I hadn't gone in… (on) a tough day in the office".
Reeves added: "It's been damaging. I'm not going to deny that, but I think where we are now, with a review led by (disability minister) Stephen Timms, who is obviously incredibly respected and has a huge amount of experience, that's the route we're taking now."
Government maintains reform commitment
Prime Minister Sir Keir Starmer (Labour) has said the Government is still committed to welfare reform, but ministers will now wait for the conclusions of the Timms review before implementing changes to Pip.
(PA/London) Note: This article has been edited with the help of Artificial Intelligence.
