Badenoch says Healey's budget will be even worse than Reeves's two

Bank tax to be budget’s biggest revenue-raiser as headroom cut to £15bn

Conservative leader Kemi Badenoch was due to give a speech and hold a press conference at 10am on Monday, in which she will claim that John Healey’s first budget, due a week tomorrow, will be even worse than the two delivered by Rachel Reeves, which raised taxes by £40bn and £26bn respectively. The Guardian’s UK politics live blog reported that, because Healey is not cutting spending, Badenoch will argue the budget will do “more damage to our country than either of Rachel Reeves’ budgets did.”

Her intervention follows a front-page report in The Times by Steven Swinford that Healey has decided not to raise capital gains tax in the budget, which the live blog said firms up what had already been hinted at. A capital gains tax hike was for a while seen as the government’s preferred money-raising ploy, the blog noted, not least because several senior figures in the cabinet were lobbying for one earlier this year. The Times reported that “Senior allies of Andy Burnham, including several cabinet ministers, have been pressing for a rise in capital gains tax on the sale of second homes, shares and other assets to help repair the public finances.” The chancellor, the paper said, “has ruled this out after warnings that it could ultimately cost the government money if wealthy individuals left the UK or deferred selling assets.”

In place of a capital gains tax increase, the biggest “revenue raiser” in the budget will be a tax on banks, which will be used to help fund a targeted and temporary package of support on the cost of living, according to the Times. Healey will also reduce the government’s fiscal headroom — a buffer against future events — from £23bn to around £15bn.

In the extracts, Badenoch said: “John Healey is not Rachel Reeves. Many people see that as an improvement. How could it be worse than £70bn in new tax rises across just two budgets?” She added: “However, I’m worried that next week John Healey will deliver a budget that does more damage to our country than either of Rachel Reeves’ budgets did.”

She continued: “We are being told that next week’s budget is going to be ‘nothing to see here’. That is code in Whitehall for a budget that tries to do as little as possible … in the hope that no one notices.” Badenoch also said: “Picture the chancellor burying his head in the sand and hoping to deliver a budget so inconsequential that it ‘does no harm’ - as some Labour MPs have been asking. But the problem is that Britain cannot afford to do as little as possible. Problems have caught up with us that we can no longer afford to run away from. First and foremost, that means living within our means.”

The Conservatives have announced plans to cut government spending by £70bn a year, and according to the extracts Badenoch thinks Healey should follow suit.

The live blog also described how the budget detail reached the press. It noted that a Whitehall myth holds that the Treasury never gives out detail about what is coming in the budget before it is actually announced; in fact, on certain issues the Treasury regularly ensures that the media gets an accurate picture of what is coming in a budget to minimise the risk of the markets getting an unwelcome surprise. This is done not through on-the-record statements, but via “murky background nods, winks and hints,” and it has been happening overnight, with journalists being assured that the Times’ story is accurate.

Monday’s agenda, as set out by the live blog, included Prime Minister Andy Burnham chairing cabinet in the morning and Badenoch’s speech and press conference at 10am. Also scheduled were oral questions to Health Secretary Yvette Cooper at 11.30am; the publication at noon of the latest report from the UK Covid-19 Inquiry, chaired by Heather Hallett, covering care homes; a Downing Street lobby briefing at noon; the resumption after 12.30pm of a Commons debate on the Northern Ireland Troubles bill; a 2pm rally in Plymouth addressed by Reform UK leader Nigel Farage; and evidence from Business Secretary Jonathan Reynolds to the Commons business committee at 2.30pm.