Chancellor Rachel Reeves Defends Controversial Budget as Critics Say It Raises Taxes on Workers

Britain's Chancellor of the Exchequer, Rachel Reeves, defended her latest budget in Parliament as critics accused the Labour government of breaking promises by effectively raising taxes on working people. The package has sparked a fierce political debate over fairness, manifesto commitments and the use of so-called "stealth" tax measures.

Threshold freeze and the manifesto row

The most contested measure is a freeze on tax thresholds. Normally indexed to inflation, thresholds will not rise this year, meaning pay increases could push some workers into higher tax brackets and raise their tax bills even though headline tax rates remain unchanged.

Asked whether the move breached Labour's manifesto promise not to raise taxes on working people, Reeves said the manifesto referred to tax rates — income tax, national insurance and VAT — rather than the movement of thresholds, and acknowledged the freeze will have a cost for some households.

Child benefits and poverty reduction

The budget also removes the two‑child cap on certain benefits and tax credits, reversing a policy that limited support to families with more than two children. Supporters argue the change could significantly reduce child poverty; Reeves described the package as delivering "the biggest reduction in child poverty" since records began.

Targeted tax changes and levies

The plan includes a mix of targeted tax changes: the Remote Gaming Duty will rise from 21% to 40%, the online betting tax will increase from 15% to 25%, while the horse-racing duty remains at 15% and the Bingo Duty will be abolished. New per-mile charges for electric vehicles — set at 4 cents per mile for battery-electric cars and 2 cents per mile for plug-in hybrids, payable alongside vehicle excise duty — were introduced to help fund road maintenance. Reeves said those levies will double road-maintenance funding and that the government will invest $265 million to expand electric‑vehicle charging infrastructure.

Reactions from analysts and opposition

The Resolution Foundation estimates the chancellor has delivered roughly $90 billion of tax increases across her first two budgets, calling this package one of the largest tax turns by a newly elected government since the early 1990s. Conservative figures were sharply critical: Shadow Chancellor Mel Stride called it a "smorgasbord that's turned out to be a bit of a dog's breakfast," saying about 43 different tax rises will fall on working households and urging Reeves to resign. Conservative leader Kemi Badenoch described the budget as a "total betrayal" of voters, accusing the government of favouring spending increases over fiscal discipline.

What it means for households

Ministers argue the measures are needed to fund priorities such as child poverty reduction and infrastructure investment. Critics say freezing thresholds is a subtle way to raise taxes on working people and will drag more households into higher tax bands over time. The political debate is likely to continue as independent analysts and household budgets reveal the measure-by-measure impact.