Recently, the Chancellor was probed about the ‘Reset Budget’.
Reeves told MPs: ‘This was a once in a parliament reset – we will never have to do a Budget like this again.’ ‘Small businesses struggle most with employer NI so we increased the employment allowance to £10,000 for a million smaller businesses so they will be paying no more or no less than they were before.’
Reeves said: ‘It is important to know that there is a floor below which wages cannot fall so the lowest paid workers will not see any of the NI increases passed on to them as it is illegal to pay them less than the national minimum wage. Different sectors in different businesses will take a different approach.’
When questioned by MPs on the impact of the employer NI rise and why she had not reversed the last government’s double cut in employee NI, Reeves stressed that the government had to ‘make some difficult choices and needed to plug that gap when we came in’.
‘Taking NI for employees back to the previous rate was not an option… to put that burden on working people was the wrong approach,’ she said.
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On the tax options available, Reeves said: ‘We could have reversed the cut to employee NI, we could have frozen thresholds for longer but the threshold freezes in the last parliament raised £45bn, more than all the tax increases announced in the Budget last week. I don’t think that was the right approach – freezing thresholds for another two years.’
Inevitably the issue of the changes to agricultural property relief were raised, which has seen an outcry from farmers concerned about the future of their farms under new inheritance tax rules.
Reeves said: ‘I want to address the issue of paying the bill. I want to be really clear that for those estates where there are IHT charges, they can pay the bill over 10 years, with no interest and nobody else gets that.’ ‘Since 1992 there hasn’t been IHT on agricultural property so I accept this is a change to the system,’ Reeves said.
With a strong farming lobby, MPs were keen to vent on this issue, asking whether business asset disposal relief could have been increased as an option and why there was an apparent lack of assessment of how far the decision affects food production, which was described as ‘alarming people as the impact is quite profound’.
The Chancellor was not deterred, stressing: ‘We think we’ve got the right balance given the need to raise money and the fact that all communities, including rural communities, rely on stable public finances because of the cost of capital and importance of a well functioning education and health system.’
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