Tony Blair think tank warns Rachel Reeves must cut if manifesto

Published: 06 November 2025. The English Chronicle Desk. The English Chronicle Online.

Chancellor Rachel Reeves has been warned by Sir Tony Blair’s think tank that she may need to slash taxes again before the next general election if she breaks a key manifesto pledge and implements significant tax hikes in the upcoming Budget. The Tony Blair Institute for Global Change (TBI) cautioned that any increase in VAT or income tax must be paired with pro-business reforms to avoid plunging the UK into a “tax-and-spend doom loop.”

The warning follows Reeves’ recent pre-Budget address, in which she indicated that sweeping tax increases are likely later this month, stating that “we will all have to contribute.” The TBI stressed that any major tax rises should be temporary and explicitly conditional, designed as a short-term measure to stabilise public finances rather than a permanent policy shift. The think tank also urged targeted tax cuts before the next election once economic growth strengthens and public service reforms deliver results.

Tom Smith, director of economic policy at the TBI, said the chancellor faces the challenge of balancing the expectations of markets, the public, and her party. He added that the only sustainable path involves pairing fiscal discipline with measures that stimulate long-term growth. “A credible Budget can’t just raise taxes – it must raise Britain’s sights. The government needs to show fiscal discipline, but also the confidence to back business,” Smith said.

The TBI paper further highlighted that planned changes to migration policy and employment rights risk damaging the UK’s flexible jobs market. It recommended retaining the five-year route to permanent settlement for skilled worker visas, expanding access and reducing costs for the global talent visa, introducing a “tech excellence” visa for engineers, founders, and researchers, and creating a permanent key worker visa for shortage professions including construction and care.

The warning comes as the Confederation of British Industry (CBI) also called for caution over “death by a thousand taxes.” In its submission to the Treasury, the organisation urged the government to make decisions that stimulate economic growth while avoiding repeated incremental tax increases. CBI chief executive Rain Newton-Smith said that short-term fiscal tinkering could undermine long-term growth and warned that failing to take decisive steps now would risk a downward spiral in the economy.

“Yearly tinkering to close an ever-increasing fiscal gap simply isn’t a viable approach to a challenge this big,” Newton-Smith said. “We need to take tough decisions now or risk robbing Peter to pay Paul just to fund normal government expenditure, putting our growth prospects in peril. Short-term thinking leads to long-term decline – let’s not make that a political choice we live to regret.”

The CBI also encouraged the government to accelerate infrastructure projects and use technology to modernise the economy, emphasising that a long-term growth strategy should complement any temporary revenue measures.

Reeves herself acknowledged on Tuesday that “each of us must do our bit” and signalled that hard decisions lie ahead. While her statements hinted at the possibility of manifesto-breaching tax increases, advisors and think tanks are warning that such measures must be carefully framed and temporary to preserve political credibility while safeguarding economic stability.

The TBI concluded that the government’s approach should focus on combining fiscal discipline with policies that make the UK a more attractive place to invest, work, and grow business. It argued that temporary tax rises could be justified if accompanied by clear messaging that they would be reversed as the economy recovers, turning short-term stabilization into the foundation for pre-election tax cuts and a sustainable growth path.

As the Chancellor prepares for the Budget later this month, she faces intense scrutiny from think tanks, businesses, and economists alike. The message from both the TBI and the CBI is clear: striking the right balance between fiscal responsibility and growth-friendly policies is crucial, and failure to do so could have political and economic consequences in the run-up to the next general election.