Rachel Reeves has said she is determined to “defy” forecasts that suggest she will face a multibillion-pound black hole in next month’s budget.
Writing in The Guardian, the chancellor argued the “foundations of Britain’s economy remain strong” – and rejected claims the country is in a permanent state of decline.
Reports have suggested the Office for Budget Responsibility is expected to downgrade its productivity growth forecast by about 0.3 percentage points.
Image: Rachel Reeves. PA file pic
That means the Treasury will take in less tax than expected over the coming years – and this could leave a gap of up to £40bn in the country’s finances.
Ms Reeves wrote she would not “pre-empt” these forecasts, and her job “is not to relitigate the past or let past mistakes determine our future”.
“I am determined that we don’t simply accept the forecasts, but we defy them, as we already have this year. To do so means taking necessary choices today, including at the budget next month,” the chancellor added.
She also pointed to five interest rate cuts, three trade deals with major economies and wages outpacing inflation as evidence Labour has made progress since the election.
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4:17
Chancellor faces tough budget choices
Although her article didn’t address this, she admitted “our country and our economy continue to face challenges”.
Her opinion piece said: “The decisions I will take at the budget don’t come for free, and they are not easy – but they are the right, fair and necessary choices.”
Yesterday, Sky’s deputy political editor Sam Coates reported that Ms Reeves is unlikely to raise the basic rates of income tax or national insurance, to avoid breaking a promise to protect “working people” in the budget.
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This, in theory, means those on higher salaries could be the ones to face a squeeze in the budget – with the Treasury stating that it does not comment on tax measures.
In other developments, some top economists have warned Ms Reeves that increasing income tax or reducing public spending is her only option for balancing the books.
Experts from the Institute for Fiscal Studies have cautioned the chancellor against opting to hike alternative taxes instead, telling The Independent this would “cause unnecessary amounts of economic damage”.
Although such an approach would help the chancellor avoid breaking Labour’s manifesto pledge, it is feared a series of smaller changes would make the tax system “ever more complicated and less efficient”.
Kemi Badenoch has said hacking into Harriet Harman’s website when she was younger is “not the same” as Rachel Reeves failing to get a £900 rental licence for her home.
The Tory leader, who has called for the chancellor to go for breaking the law, told Sky News’ deputy political editor Sam Coates she was not an MP in 2008 when she got into Labour peer Baroness Harman’s website and changed it so it was pro-Conservative.
Hacking into websites is a criminal offence and can be punishable with a fine or up to a two-year prison sentence for minor offences, or life imprisonment for the most serious.
Asked if she had ever broken the law, Ms Badenoch said: “I don’t believe that I have, but if I had done so, if I had done so when I was in government, then I would have been sacked or I would have been forced to resign.”
But reminded of her hacking episode, she said: “This was something I did in my 20s.
“We’re not talking about something that Rachel Reeves did in her 20s, we’re talking about something she’s doing as chancellor, after she became chancellor.
“It is not the same thing at all.”
She said people should not “try and draw a false equivalence” and said she guessed Baroness Harman’s password to enter the website, adding it was “a summary offence, like speeding”.
“This is whataboutery, we have a government of people who are repeatedly breaking the law,” she added.
Image: Rachel Reeves has apologised for the error and has now applied for the rental licence. Pic: PA
Ms Reeves has said she was not aware she needed a rental licence, required in some areas, to let out her family home in Dulwich, southeast London, after she moved to Downing Street when she was made chancellor.
She has now applied for a licence and apologised to Sir Keir Starmer, who has said that is adequate and there is no need for an investigation.
But Ms Badenoch said Ms Reeves’s position is untenable, given the PM has said “lawbreakers shouldn’t be lawmakers”.
Under the Housing Act 2004, introduced by Labour, councils can decide to introduce selective licensing, where residential landlords in specified areas must have a licence.
Landlords must adhere to certain requirements to obtain a licence, including gas certificates, working carbon monoxide alarms and fire safety regulations for furnishings.
They must secure a licence within 28 days of renting out a home.
Southwark Council, where Rachel Reeves’ house is, charges £900 for a licence, which lasts five years.
Failure to secure a selective licence can result in a penalty of up to £30,000 or an unlimited fine from a court upon conviction.
Landlords can also be made to repay up to 12 months’ rent to the tenant or they can be prevented from renting out the property.
Serious and repeat offenders can be prosecuted, with a sentence of up to five years or an uncapped fine, and they can be put on a rogue landlords database.
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9:59
Tories call for Reeves investigation
Ms Badenoch’s hacking escapade emerged in 2018 after she was asked about the “naughtiest” thing she had ever done in an interview with the Core Politics website.
“About 10 years ago, I hacked into a Labour MP’s website and I changed all the stuff in there to say nice things about Tories,” she said.
The then-Conservative Party’s vice chair for candidates, who became an MP in 2017, said she had apologised and called it a “foolish prank”.
Baroness Harman told Sky News’ Electoral Dysfunction podcast last year Ms Badenoch had posted on her website as if she was the Labour peer, saying she was thinking of joining the Conservative Party.
Ms Badenoch “owned up to it and actually bragged about it”, Baroness Harman said, as she admitted her password at the time was “Harriet Harman”.
For Shelley Mclean, every night is a sleepless one, just to keep her 11-year-old daughter alive.
Missy was born with a rare genetic condition that affects her breathing, digestion and movement.
She spent the first nine months of her life in hospital before coming home with a breathing tube in her throat, a feeding tube in her stomach, and a line into her bowel.
At first, the family had some NHS-funded nighttime care to help keep Missy safe while she slept.
But when her local NHS body decided she no longer met the threshold, that support was taken away.
Image: Missy has a breathing tube in her throat, a feeding tube in her stomach, and a line into her bowel
Now, Missy’s mother is responsible for her care.
“I’m her nurse, her physio, her carer,” says Shelley. “I don’t sleep properly because I’m scared she’ll stop breathing.
“They say we don’t meet the threshold – but I don’t know what more they need to see.”
Every night, Shelley prepares Missy’s medicines, checks her tubes, and monitors her breathing.
“This is an epilepsy medicine,” she says, holding up a syringe.
“If she’s not tolerating food orally, I put it down the tube.”
Despite her exhaustion, Shelley is grateful for the care that once saved her daughter’s life.
“I’m very grateful the NHS saved Missy – she wouldn’t be here without them. But they’re crippling the parents.”
Image: Shelley Mclean cares for her daughter Missy round the clock
The postcode lottery
Children like Missy who leave hospital but still need intensive support are meant to receive what’s called NHS continuing care – specialist help for those with the most complex, life-limiting or life-threatening needs.
But Sky News has seen new data which shows access to this care is deeply inconsistent across England, creating a postcode lottery that leaves many families struggling to survive without the help they require.
New figures obtained by Sky News reveal just how uneven continuing care has become.
NHS spending on children’s continuing care ranges from just 80p to £6 per head depending on where families live.
Out of almost 100,000 children in England with a life-limiting or life-threatening condition, only around 4% – roughly 4,400 – receive NHS continuing care funding.
And more than half of all disabled children referred for this kind of support are rejected.
Anna Bird, chief executive of charity Contact, says the system is leaving thousands of families on the brink.
“We’re not seeing the commitment to make sure those who need continuing care are getting it,” she told Sky News.
“Our research shows there’s a huge postcode lottery – families are running kind of little hospitals at home just to keep their children well and alive.
“They’re being let down by continuing care, and they’re not getting the support they need.”
In some areas, campaigners say local NHS bodies have cut back on support even for children with the most serious medical conditions.
Parents report being told their child no longer qualifies for help despite their needs remaining unchanged.
For Shelley, that decision means she rarely sleeps through the night.
“If I don’t go to her, she could be dead,” she says quietly. “She could have a fit and… you know, she could be dead.”
Image: Shelley, Missy and her brother
In a statement, NHS Cheshire and Merseyside said: “We understand Ms Mclean will be disappointed with the decision relating to her daughter’s funding.
“While we’re unable to comment on individual cases due to our commitment to patient confidentiality, all patients are reviewed jointly by health and care professionals to ensure they are receiving the most appropriate care for their needs.
“Patients who wish to discuss their funding decision are able to contact NHS Cheshire and Merseyside using the contact details included in their patient letters.”
But campaigners say that without national standards – and without the law forcing consistent assessments – those reviews will continue to vary wildly from one area to the next.
The result is that parents like Shelley find themselves trapped between two systems – the NHS and social care – neither of which can agree who is responsible.
“I’m not the type of person who wants to ask anyone for help,” she says. “But it’s brought me to my knees.”
For Shelley, that gap is more than bureaucratic. It’s personal, relentless, and exhausting.
“I would invite them to come and have a week in my position – to try to wake up every hour, on the hour, every night. Then they might understand.”
Campaigners say no parent should have to shoulder that burden alone – and they want ministers to act.
They’re calling on the government to make continuing care a statutory entitlement, with consistent assessments, proper funding, and transparency about who gets help and who doesn’t.
Until then, families like Shelley’s will continue to do the work of the NHS from their own homes – unpaid, unsupported, and exhausted.
Image: Shelley feeding Missy
The Department for Health and Social Care said: “Our thoughts go out to Shelley and Missy – everyone should have access to high-quality, compassionate care.
“As part of our 10-Year Health Plan, the government is shifting more healthcare out of hospitals and into the community, to ensure patients and their families can get the care they need, where and when they need it.
“Integrated Care Boards are responsible for meeting the needs of local people – including Children and Young People’s Continuing Care and ensuring the care requirements of people like Missy and Shelley are met.
“This government has set out best practice, and provided guidance around assessments, decision-making and agreeing care packages for Children and Young People’s Continuing Care.”
Sir Keir Starmer has dismissed calls for an investigation into his chancellor after she apologised for putting her family home up for rent without obtaining the necessary licence.
The newspaper reported that the chancellor rented her family home in Dulwich when she moved into Number 11 Downing Street, but was unaware she had to obtain a licence to do so.
Some London boroughs require private landlords to obtain a specific kind of licence if they are putting their property up for rent – including Southwark Council, where Ms Reeves’ home is listed.
The newspaper said Ms Reeves had now applied for a licence, but the Conservatives have called for an investigation.
A spokesperson for Ms Reeves said: “Since becoming chancellor, Rachel Reeves has rented out her family home through a lettings agency.
“She had not been made aware of the licensing requirement, but as soon as it was brought to her attention, she took immediate action and has applied for the licence.
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“This was an inadvertent mistake and in the spirit of transparency, she has made the prime minister, the independent adviser on ministerial standards and the parliamentary commissioner for standards aware.”
It is understood that Sir Laurie Magnus, the prime minister’s ethics adviser, has not launched an investigation into Ms Reeves.
Sir Keir said further investigation into the issue was “not necessary” after consulting Sir Laurie.
In a letter to Ms Reeves, he suggested her apology was a “sufficient resolution”.
Daisy Cooper, deputy leader of the Liberal Democrats, said the chancellor was adding to the government’s “list of scandals”.
“The chancellor is meant to be delivering growth but the only thing she appears to be growing is the government’s list of scandals,” she said.
“Just weeks before the budget, this risks seriously undermining confidence in this government and its ability to focus on the urgent tasks at hand.”
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Under the proposal, sellers, instead of buyers, would be responsible for paying the tax.
The chancellor is understood to be looking at an annual 1% charge on the amount a property’s value exceeds £2m – a £10,000-a-year levy for homes worth £3m.
Another proposal would see capital gains tax (CGT) charged when someone sells their main home, based on the amount it has increased in value during ownership.
Reports suggest this would only be applied to the most expensive properties, with a possible threshold of £1.5m, which would affect about 120,000 homeowners and higher-rate taxpayers getting CGT bills of nearly £200,000.