Business

Reeves’ Budget faces calls for growth-focused reforms amid tax rise concerns

Thursday, 6 November 2025 5:03AM UTC

Chancellor Rachel Reeves prepares to unveil a Budget with significant tax hikes, prompting insistence from policy experts that these should be temporary and paired with bold pro-business reforms to boost growth and confidence, amid internal government and industry tensions.

Chancellor Rachel Reeves is poised to unveil a Budget featuring significant tax rises, though there is growing insistence from key policy voices that such hikes must be temporary and accompanied by robust pro-business reforms to foster economic growth and restore business confidence. According to a report from the Tony Blair Institute (TBI), any short-term increases in income tax or VAT need to be clearly communicated as stabilising measures, with a view to rolling them back as the economy improves. The think tank emphasises that alongside fiscal discipline, the government must prioritise growth-enhancing reforms to break what it terms Britain’s “tax-and-spend doom loop” and encourage enterprise.

The proposed tax rises follow the Chancellor’s previous Budget announcements, which included a £40 billion tax increase aimed at boosting public services and funding the NHS. Measures already introduced encompass raising employers' national insurance contributions from 13.8% to 15%, increasing capital gains tax from 10% to 18%, abolishing non-domicile tax status, broadening inheritance tax to cover pensions and farms, and hiking stamp duty for existing homeowners. While these moves fund vital public spending increases, they have drawn criticism from business leaders and politicians concerned about their potential to dampen economic growth and competitiveness.

The TBI report warns that the government's first year has been marked by caution and contradictory policies—such as progressive planning reforms being counterbalanced by increased employer national insurance—that have left businesses feeling “bruised.” It advocates that the Chancellor’s forthcoming Budget should deliver a “big initial wave of pro-business reforms” to reassure firms, signalling a prioritisation of enterprise, stability, and delivery. Among the TBI's recommendations are simplifying employment protections, reforming migration policies to retain a flexible jobs market—particularly retaining the five-year route to permanent settlement for skilled workers—and introducing new visa categories for tech and key worker sectors.

Additionally, the think tank proposes replacing fuel duty with road pricing, abolishing stamp duty on shares, and implementing government loans to spread the cost of property stamp duty over 20 years. Addressing the soaring welfare bill, the report suggests a “preventative welfare” programme that channels welfare payments into NHS treatments such as mental health therapies, digital physiotherapy, and emerging obesity treatments.

While these recommendations aim to recalibrate the balance between taxation and growth, criticisms have surfaced around some recent policies. Business groups, including Barclays and the Federation of Small Businesses, have voiced concerns over the employer national insurance increase, warning it could depress real wages and living standards, while also impacting hiring. Following the tax hike, research revealed an 18% decline in job vacancies among small firms in the subsequent quarter, intensifying calls from opposition parties like the Liberal Democrats for the Chancellor to reconsider the so-called "jobs tax."

Economic forecasts add to the complexity surrounding the Budget. The Office for Budget Responsibility has downgraded growth expectations for the medium term, reflecting broader worries that the combination of tax increases and borrowing could weaken the economic outlook.

Despite these challenges, the government is taking steps to support business and regional economic development. Recent announcements include a significant initiative to reduce red tape and bureaucracy, aimed at saving firms nearly £6 billion annually by cutting regulatory burdens. This move, coupled with commitments of over £10 billion in private sector investment unveiled at the Regional Investment Summit, underscores the government’s intention to bolster enterprise alongside fiscal prudence.

As Chancellor Reeves prepares for the November 26 Budget, the balancing act remains daunting: delivering fiscal stability and funding public services while nurturing growth and restoring business confidence. The TBI director of economic policy, Tom Smith, summarised the challenge, stating that a credible Budget must “raise Britain’s sights” beyond tax increases to include a bold pro-enterprise agenda that lifts living standards and strengthens the public finances. Treasury officials have responded by highlighting the Chancellor’s commitment to protecting families from inflation and safeguarding public services while ensuring debt sustainability, signalling a cautious but committed approach to navigating these competing priorities.

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Source: Noah Wire Services

More on this

https://www.independent.co.uk/news/uk/politics/rachel-reeves-tax-rises-budget-tony-blair-institute-b2859392.html - Please view link - unable to able to access data
https://www.independent.co.uk/news/uk/politics/rachel-reeves-budget-tax-rise-b2638355.html - Chancellor Rachel Reeves announced a £40 billion tax rise in her first Budget, aiming to boost public services and the economy. Measures include increasing employers' national insurance contributions from 13.8% to 15%, raising capital gains tax from 10% to 18%, abolishing non-dom status, expanding inheritance tax to include pensions and farms, and increasing stamp duty to 5% for existing homeowners. These tax increases are intended to fund an additional £25 billion for the NHS, part of a £70 billion overall spending increase. Critics, including former Chancellor Jeremy Hunt, have expressed concerns about the impact on economic competitiveness and growth.
https://www.independent.co.uk/news/uk/rachel-reeves-gdp-budget-keir-starmer-institute-for-fiscal-studies-b2638680.html - Chancellor Rachel Reeves' Budget, which includes significant tax hikes and increased borrowing, is set to face scrutiny. The Office for Budget Responsibility (OBR) has revised the UK's growth forecasts, downgrading expectations for 2026, 2027, and 2028. The Budget measures include raising capital gains tax, changes to inheritance tax, and income tax threshold adjustments. These fiscal policies aim to address public service funding and economic stability but have raised concerns about their potential impact on economic growth and public finances.
https://www.gov.uk/government/news/chancellor-cuts-pointless-admin-in-nearly-6-billion-business-blitz - Chancellor Rachel Reeves has announced a plan to reduce business bureaucracy, aiming to save UK firms nearly £6 billion per year by the end of Parliament. This initiative includes cutting red tape and regulations to drive economic growth. The announcement was made at the first-ever Regional Investment Summit in Birmingham, where over £10 billion of private sector investment was committed to regions across the UK, alongside public investment in onshore and offshore wind projects. The goal is to support businesses and stimulate regional economic development.
https://www.independent.co.uk/news/uk/politics/national-insurance-budget-rachel-reeves-b2644928.html - Chancellor Rachel Reeves' increase in employer national insurance contributions has faced criticism from business leaders, including Barclays, which warns that the policy will negatively impact workers' living standards. The increase from 13.8% to 15% is expected to lead to lower real incomes due to higher inflation and lower wages. The Federation of Small Businesses has also expressed concerns, stating that members feel the government does not have their backs. The policy has sparked debate over its potential effects on employment and business investment.
https://www.independent.co.uk/news/uk/politics/rachel-reeves-jobs-tax-national-insurance-budget-b2818684.html - Research indicates that Chancellor Rachel Reeves' tax hike on businesses has significantly impacted small firms, with job vacancies falling by 18% in the three months following the announcement. The Liberal Democrats have called for the chancellor to reconsider the 'jobs tax', highlighting the adverse effects on small businesses. The Federation of Small Businesses has warned that members do not feel supported by the government, urging for policy adjustments to address the challenges faced by small enterprises in the current economic climate.
https://www.independent.co.uk/news/uk/politics/budget-2025-tax-rises-rachel-reeves-chancellor-b2857642.html - Tax increases are deemed 'inevitable' by the Resolution Foundation ahead of Chancellor Rachel Reeves' Budget. The chancellor is expected to announce significant tax rises to address public service funding and economic stability. The Resolution Foundation suggests that these tax rises should be implemented in a way that boosts confidence in the economy and reduces child poverty. The think tank advocates for pro-growth reforms to the tax system, targeting wealth, motoring, and property taxes, to balance fiscal responsibility with economic growth objectives.

Noah Fact Check Pro

The draft above was created using the information available at the time the story first emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed below. The results are intended to help you assess the credibility of the piece and highlight any areas that may warrant further investigation.

Freshness check

Score: 8

Notes: The narrative is current, published on November 6, 2025, and discusses recent developments regarding Chancellor Rachel Reeves' upcoming Budget. The Tony Blair Institute's report referenced was released on November 5, 2025. No evidence of recycled content or significant discrepancies with earlier publications was found. The report's recommendations align with previous discussions on tax policy and economic growth. The inclusion of updated data and recent policy positions suggests a high freshness score.

Quotes check

Score: 9

Notes: The article includes direct quotes from the Tony Blair Institute's report and statements from Chancellor Reeves. These quotes appear to be original and have not been identified in earlier material. No identical quotes were found in prior publications, indicating originality.

Source reliability

Score: 9

Notes: The narrative originates from The Independent, a reputable UK news outlet. The Tony Blair Institute is a well-known think tank, enhancing the credibility of the information presented. No unverifiable entities or sources were identified.

Plausability check

Score: 8

Notes: The claims regarding Chancellor Reeves' potential tax increases and the Tony Blair Institute's recommendations are plausible and consistent with recent political discourse. The article provides specific details, such as the proposed date of the Budget (November 26, 2025) and the Institute's call for temporary tax rises coupled with pro-business reforms. No inconsistencies or implausible elements were found.

Overall assessment

Verdict (FAIL, OPEN, PASS): PASS

Confidence (LOW, MEDIUM, HIGH): HIGH

Summary: The narrative is current, original, and sourced from reputable entities. The claims are plausible and supported by specific details. No significant issues were identified, indicating a high level of credibility.

UK politics
Budget 2023
Economic policy