Rachel Reeves tells Sky News she will still be chancellor for the autumn budget

Added: 2026-05-22

[00:00:00]So you've announced uh VAT off kids tickets and meals, free bus travel, sort of eat out to help out without the social distancing. Is this just a gimmick to get through a difficult political moment?

[00:00:13]>> We've announced a number of things today. First of all, we have extended the freeze on fuel duty until at least the end of this year. I understand how concerned families and businesses are at the moment about the implications of the conflict in the Middle East. This is not a war that we started. I've been very open in um my views that this war was a mistake. But regardless of that, it is having an impact on people here in the UK. So I've extended that freeze in fuel duty, extra help for HGV drivers, so people who have to use their car for work, for farmers, and for rail freight.

[00:00:48]And yes, uh extra support for families during the summer holidays because the summer holidays can be an expensive time for families. Parents have to take time off work. They've got to keep the kids entertained during those long summer holidays. And so taking VAT on theme parks, on uh museums, on cinema tickets down from 20% to 5% is a bit of a boost for families during the summer and free bus travel as well for kids.

[00:01:14]>> And there's no question that many many people need support, but millions of people don't. So why hand out public money at such a critical time for the public finances for chips and uh Disney movies when so many people can afford to pay for themselves?

[00:01:28]>> Well, of course, many of our measures are targeted towards exactly those who need it most. Uh from September, when kids go back to school, all kids whose parents or carers are on universal credit will benefit from free school meals. In April, we got rid of the two child limit within child tax credits so that more money went to the poorest families. But I also recognize that this conflict in the Middle East is having an impact on all families and it's also having an impact on the hospitality sector. So these measures taking VAT down from 20% to 5% on summer activities for the kids and also VAT down on children's meals in restaurants, cafes, uh hotels down from 20% to 5% helps a sector that has been struggling and also helps families.

[00:02:16]>> It does, but it's all coming out of it's taxpayer money ultimately. And what hospitality needs is cheaper labor costs. You talked there's some chemicals and uh ceramics industries. They need cheaper energy bills. There's some fundamental things in the economy you can do that you're not doing. It's just a it's a quick handout to take away from a really treacherous moment for the prime minister and you.

[00:02:35]>> Let me say um something about that. The idea that the response to a conflict in the Middle East is reducing the wages of the lowest paid, those who are on the national living wage and the national minimum wage. That is no response to a crisis like this because it is people on those lower incomes who struggle most when the cost of fuel, when the cost of energy, when the cost of food goes up.

[00:02:55]So I am unequivocal that the minimum wage and the living wage are absolutely essential to help people on the lowest incomes and indeed we are helping uh businesses with energy costs. We've already introduced uh the British industrial competitiveness scheme but today I've gone further with additional help for the chemical sector and the ceramic sector both of which are energy intensive and are struggling because of this conflict in the Middle East. And I make no apology for getting on with doing the job of chancellor and whatever is happening in politics and around the world. I focus is on the cost of living for families and business as our constituents would rightly expect.

[00:03:38]>> You talk about the job of chance. Will do you think you'll be delivering the next budget?

[00:03:40]>> Yes, I do. And I'll tell you why.

[00:03:42]Because in the almost two years I've been chancellor, I've got the economy growing, beating the forecasts. We were the fastest growing economy in the G7 in the first quarter of this year. defying the forecasts. Inflation, just yesterday, the numbers came out that inflation is down. The only G7 country where inflation fell last month, beating the forecasts. And we're tackling the cost of living. We've done that with £150 off energy bills. We've done that by freezing rail fairs and prescription charges. And I've done it again today with this package of measures to help businesses, to help motorists, to help with the supermarket shop, and to help with the >> I'm sure people who want to be prime minister hear that loud and clear. To be clear, do you back the current prime minister to continue in his job?

[00:04:23]>> The prime minister is getting on with his job in being back and there is no vacancy. Do you back him?

[00:04:28]>> Let's see what happens in the future.

[00:04:30]But Kam is the prime minister. He has chosen me to be his chancellor and I'm getting on with my job delivering for the country and delivering for our prime minister on his priorities which are growing the economy tackling the cost of living crisis getting immigration down and reducing NHS waiting list. All of which we are achieving and succeeding in doing.

[00:04:50]>> You've said nothing today about energy costs. You you've talked about the need to do something in uh future. But one of the reasons you said nothing is because I as I understand it, you don't believe that a huge borrowing spree as happened last time uh with the energy price guarantee works. Do you think the people who want to be Andy Bernham in particular understand that the UK is maxed out and that the public finances will not withstand the kind of policies he has in mind? Well, Andy has been really clear that he would stick to the fiscal rules that Labor Party set out in our manifesto and that I've delivered in government. And those fiscal rules say that we pay for day-to-day spending through tax receipts, but that we can subject to getting debt down invest in those things that will help grow our economy. And Andy like Karma and like me are absolutely committed to those things. But if you look at the package of measures that I've set out today, they are affordable because we're closing a tax loophole. the foreign branch exemption which means that multinational country companies can uh book losses overseas in the UK and therefore reduce their corporation tax here. That's not right. It's not fair.

[00:05:55]Businesses should pay their fair share of tax and we're using the revenues from that to help people with the cost of living.

[00:06:01]>> One more personal question. Yesterday you were heckled quite aggressively at a a petrol station. You clearly didn't think much of the bloke's manners and many people will agree with you that is no way to do that. But the kind of anger that was there um does it surprise you?

[00:06:14]Do you understand it? And I wonder if you think you've got any chance of changing someone like that?

[00:06:18]>> I'm not sure if I can change uh his mind. I think his mind was pretty made up Paul. Uh but I think the majority of people in this country recognized that the Labor government had a tough job when we came in. Public finances were in a mess. Public services were in a mess.

[00:06:31]and the economy wasn't growing and living standards weren't increasing. Uh we are turning those things around.

[00:06:37]Can't do it all overnight. But I think people recognize that we are beginning to turn things uh around. And what I would just say to that gentleman, he says that he loves this country and that he's a patriot. One of the things that I love about this country is good manners and I think that he lacked those yesterday.

[00:06:54]>> Thank you, Chancellor.

[00:06:56]>> Well, there she was giving a response to what happened yesterday. But overall, Paul, she would say this is about lifting public spirits. Um, what is the real difference to what is going to be in people's pockets though? Is this just a gimmick?

[00:07:08]>> Uh, it's it's certainly open to that charge was the first question I asked her and it is I think it is transparently about that. It's it's it's a bit of treasury large s um certainly the measures around cutting VAT on kids meals, tickets, free bus travel for under 15 to try and uh ease no doubt genuinely held desire to help people help them with the cost of living before the realities of what is coming down the track because of the energy shock out of the Gulf and the Iran war hit in the autumn. I mean it's it's reminds me of eat out to help out. It's a to try and persuade people to get out there, help local hospitality industry.

[00:07:46]I mean, it's eat out to help out without the social distancing and no one is going to say no to cheaper uh cheaper prices. Um the Institute of Fiscal Studies think it'd be worth about £10 per household. So, it is a small amount of money, but add it up, it's quite a lot. In fact, and the interesting there's a bit more than just this uh this money saving for families, the Great British Savings Scheme, uh as they're calling it. There's uh about half a billion pounds of support for the chemicals industry and the ceramics industry. Um there's another£700 million round fuel duty. It's about 1.6 billion pounds the Treasury has announced it's spending sort of out of nowhere this week. And there's also a tax raising measures to pay for it. Another hit closing a tax loophole affects oil and gas companies. So there's tax measures they're spending. It's almost a little mini fiscal event like a happy meal fiscal event, should we call it.

[00:08:34]>> Happy budget.

[00:08:34]>> A h well they'll they'll certainly hope so. Um, look, they say the costs will be covered. There's nothing there to address the big underlying structural stuff. And the big question, what happens? How high do energy bills get?

[00:08:45]And how far does the government checkbook reach then come the autumn?

[00:08:48]Well, she didn't address it. And in the Treasury, they are not going to repeat a massive bailout. I mean, the politics here are interesting, too. Of course, we know what's happened to Kiss, but she was absolutely clear she thinks she'll deliver the next budget. And she delivered a reason, a little list of reasons why, which you could read as a bit of a pitch uh to perhaps Andy Burn and West Streeting.