Ministers have to make ‘tough choices’ says Phillipson amid Budget backlash

Bridget Phillipson said that there will be “no return to austerity” but that “we do, all of us have to make some really tough choices because of the inheritance… given to us by the Conservatives.”

Concerns about the spending cuts have been raised across different Government departments, the PA news agency understands.

It was reported on Wednesday evening by the Times newspaper that several senior ministers voiced concerns at the Cabinet meeting on Tuesday about proposals to reduce some departments’ spending by as much as 20%, and have since followed up with letters to Sir Keir Starmer.

Speaking to Times Radio on Thursday morning, Ms Phillipson said “we’ve got to fix the problems that we’ve inherited”.

She told the station there will be “no return to austerity” and added: “We do, all of us have to make some really tough choices because of the inheritance… given to us by the Conservatives.”

She similarly told Sky News that there are “difficult choices” the Government is “having to confront” and said there have been “conversations, meetings, correspondence as part of the usual Budget process,” but would not be drawn on details.

“I’m not going to get into a discussion about meetings or private conversations that we have both within Cabinet and as part of our Cabinet responsibilities, that wouldn’t be a responsible thing to do,” she told the broadcaster.

Meanwhile, a think tank has said that an increase in capital gains tax in the fiscal statement would not stop entrepreneurs from investing in the UK.

The measure has been suggested as one of those Chancellor Rachel Reeves is considering to plug a £40 billion funding gap.

The tax could rise by “several percentage points” beyond its current rate at 20%, the Times newspaper reported.

But in a report published on Thursday, the Institute for Public Policy Research (IPPR) said interviews with millionaires suggested most would not be put off investing by a rise in capital gains tax.

These include investor Julia Davies, who said she had “never let tax rates dictate my decisions to fund innovation or pursue opportunities”, and Photobox founder Graham Hobson, who said the suggestion it would discourage investment was “simply a myth”.

Mr Hobson said: “Capital gains tax was equal to income tax when I set up Photobox. It didn’t stop me from starting and growing a successful business.”

Since entering office, the Government has pointed to a “£22 billion black hole” in the UK’s finances, and the Treasury is now said to have identified a far larger £40 billion funding gap which Ms Reeves will seek to plug to protect key departments from real-terms cuts and put the economy on a firmer footing.

Earlier this week, the Prime Minister declined to rule out increasing employer’s national insurance contributions, and told the BBC that the party was “very clear in the manifesto that we wouldn’t be increasing tax on working people”.

Labour’s general election manifesto pledged that the taxes on working people will be kept “as low as possible”. 

The party promised to not increase “National Insurance, the basic, higher, or additional rates of Income Tax, or VAT”.

Downing Street denied on Wednesday that the Prime Minister gave the public the wrong impression about the scale of the tax rises the party would implement.

Asked whether Sir Keir had misled voters, his press secretary said: “No. So we stand by our commitments in the manifesto, which was fully funded.

“We were honest with the British public, both during the election and since, about the scale of the challenge that we would receive.”