CHANCELLOR Rachel Reeves conceded she was wrong to pledge no big tax rises before the election as she defended her Budget proposals today.

Ms Reeves blamed the U-turn on the worse-than-expected state of the public finances she inherited but promised there was “no need to increase taxes further.”

On a post-Budget media tour, Ms Reeves claimed growth would be boosted by the new measures, allied to unspecified reforms to welfare and industrial strategy which are on their way.

Labour MPs are increasingly anxious about the Budget, which pumped money into the NHS and schools but raised taxes in a way Ms Reeves has acknowledged will hit pay rises while not leading to either growth or higher household income.

“Now we have fixed the foundations of our economy, I am going for growth,” she said. “Because we cannot tax and spend our way to prosperity, nor can we tax and spend our way to better public services.

“Instead, we need economic growth and we need economic reform.”

So far, the government’s growth plans have leaned almost entirely on planning reform, so there are fears that unpopular neoliberal reforms may be on their way.

Independent expert at the Institute for Fiscal Studies have warned that Ms Reeves will have to raise up to £9 billion more in taxes to avoid renewed austerity, a perspective she rejected.

“We have now set a public spending trajectory for the rest of this Parliament,” she said.

“We don’t need to raise more money in tax, so businesses and investors should have confidence that our public finances are now on a sound footing.”