Rachel Reeves must raise taxes to cover £41bn gap, says think tank

Taxes must rise in the autumn if Chancellor Rachel Reeves is to meet her self-imposed borrowing rules, according to an economic think tank.

The government was on track to miss the target it has set itself by £41.2bn, according to the National Institute of Economic and Social Research (Niesr).

It recommended “a moderate but sustained increase in taxes” including reform of the council tax system to make up the shortfall.

The government said “the best way to strengthen public finances is by growing the economy”, but the Conservatives said Labour “always reaches for the tax rise lever”.

The think tank, which is not affiliated to any political party or movement, suggests the government could raise revenue through changes to the scope of VAT, pensions allowances and prolonging the freeze in…