Taxes will rise. She has no choice. And it’s not her fault.

A dozen words that sum up Rachel Reeves’s list of excuses as she laid the groundwork for another tax raid.

The Chancellor insisted during a press conference on Tuesday that she was a hostage to fortune, hamstrung by decisions made by the Tories on austerity and Brexit – decisions that Reeves said the Labour Government will not repeat.

The trouble is that almost a year ago today, Reeves chose higher borrowing, higher taxes and higher spending in her maiden Budget. And it is she alone who must now take responsibility for the consequences.

Reeves said her Budget last October had served to “stabilise our public finances, making the tax and spending decisions to get debt down and to fund our public services sustainably”.

But a year ago, the Chancellor changed her borrowing rules in order to spend an extra £70bn. Not in total, but every single year for the rest of this parliament.

In the words of Richard Hughes, the chairman of the Office for Budget Responsibility (OBR), the Budget delivered “one of the largest increases in spending, tax and borrowing of any single fiscal event in history”.

It means the national debt now stands at £2.9tn, or just over 95pc of GDP.

That is up from £2.7tn at the time of the general election last year. The OBR expects it to keep on rising, both in cash terms and as a share of GDP.

It is only on Reeves’s favoured measure – the more obscure metric of public sector net financial liabilities, which offsets some government assets against the debt – on which the debt can be said to be falling.

All that has to be paid for, regardless of how the Chancellor tries to flatter the numbers, which is why markets are charging Britain higher interest rates.

After all, the Treasury must issue £300bn in debt to pay all the Government’s bills and roll over existing commitments this year alone.

This is debt that investors are only willing to take on at a premium, given the backdrop of Britain battling the highest inflation in the G7.

Reeves said keeping a lid on price rises will be a central theme on Nov 26. After all, inflation, at 3.8pc, is running at almost twice the Bank of England’s 2pc target.

“Inflation has been too slow to come down, as supply chains continue to be volatile, meaning the costs of everyday essentials remain too high,” she declared on Tuesday.

The Chancellor suggested the global trade war had wreaked havoc on prices.

However, experts, including those at the Bank of England, believe that Donald Trump’s tariffs are more likely to depress prices in the UK than increase them.

According to her view of the world, she deserves credit for enabling the Bank of England to cut interest rates.

Its base rate – which is so important for indebted households and businesses – climbed from the pandemic low of 0.1pc to a peak of 5.25pc under the Conservatives.

Now it is down to 4pc and poised to fall further.

Yet the Bank is cutting rates unusually slowly, and Andrew Bailey, its Governor, has laid most of the blame for higher prices at the Chancellor’s door.

In a letter to Reeves explaining why inflation is so far away from target, he blamed rising food prices and “administered prices”, including inflated water bills and increases in road tax set by the Government.

In a damning verdict, he added: “A reduction in total labour cost growth also appears to have been delayed by the increase in employer national insurance contributions and pay growth in sectors with a large share of employees at or close to the National Living Wage.”

The plastic packaging tax, legislated by the Conservatives but introduced under Labour, has also pushed up prices.

In an attempt to keep bills down, we can expect the Chancellor to freeze fuel duty and remove VAT from energy bills, at least temporarily.

Such a move would save the typical household £86 a year and may not affect her fiscal rules to get debt down.

The Chancellor said the Government was committed to reforming a welfare system that “counts the cost of failure”.

She said: “There is nothing progressive about refusing to reform a system that is leaving one in eight young people out of education or employment. So we have begun the job of creating a system that protects people who cannot work and empowers those who can.”

However, it comes after a series of humiliating about-turns on welfare this spring.

Most notably, Downing Street was forced to back down on plans to shave £5bn from the UK’s sickness and disability benefits bill after a backbench rebellion.

The consequences of this defeat are obvious, with spending on sickness and disability benefits expected to breach £100bn a year by the end of the decade.

Documents published last month also confirmed that a review of Personal Independence Payments (PIP) will not look to reduce the benefit’s ballooning cost.

Instead, it will only ensure the system is “fair and fit”.

Reeves is also poised to add to the welfare bill this month with a partial reversal of George Osborne’s two-child benefit cap that could increase spending by up to £3bn. That may count as reform, but it will also leave spending headed in the wrong direction.

We must spend on our public services. This was the message from Reeves on Tuesday as she lambasted the Tories and Reform for suggesting spending could be cut, including the Conservatives’ plans to reduce the size of the state by £47bn.

“Let us be clear, there is no way that cuts on that scale, equivalent to cutting our entire armed forces or cutting every single police officer in the country twice over, could be delivered without devastating consequences for our public services,” she warned. “They are the mistakes of the past which would only take us backwards. I will not repeat them.”

Sir Mel Stride, the shadow chancellor, hit back, telling The Telegraph: “Rachel Reeves has failed to grip spending after caving [in] to her backbenchers. She does not accept that spending restraint is possible because Labour don’t have the backbone to deliver it. That’s why they are planning to break their promises and put up taxes yet again.”

Separately, Reeves also said an expected downgrade of Britain’s growth potential by the OBR would be the “biggest piece of news” impacting the economic and fiscal outlook in the Budget.

She wants to blame Brexit and austerity for this. However, pumping more money into public services without linking efficiency to pay rises is a mistake. After all, productivity in the public sector is dragging down the rest of the economy.

Official figures showed public services productivity fell at the fastest pace in three years in the second quarter, with productivity across the NHS and health services driving the decrease.

Productivity is driven by innovation and investment in the private sector.

But businesses must also have the confidence to invest.

Jonny Haseldine, at the British Chambers of Commerce, said: “Business shares the Government’s ambition to grow the economy, reduce inflation and boost productivity. However, none of that is possible if costs continue to pile up on firms.

“That’s why our message is clear – no more tax on business. Our latest research shows a fifth of firms are expecting lower turnover for the next year, and a quarter have scaled back investment plans”

The world has changed. Global threats are rising, and defence spending must increase to keep pace.

Reeves also made the case on Tuesday to raise the buffer she has to meet her self-imposed tax and spending rules, which are to only borrow to invest and get debt down.

She said: “There is a reward for getting these decisions right to build more resilient public finances with the headroom to withstand global turbulence, giving business the confidence to invest and leaving the Government freer to act when the situation calls for it.”

As a result, it now looks like an increase in income tax is inevitable. But she must own these choices as she runs out of people to blame.

As Paul Johnson, the former director of the Institute for Fiscal Studies, puts it: “In one sense fair enough to blame the last government for problems. But [she is] wrong to pretend it was all utterly unexpected and couldn’t possibly have been predicted at election or Budget last year. We knew the risks when tax promises were made. And so did she.”

Martin Beck, at WPI Strategy, warns the Chancellor to tread carefully. “Given the toxic mix of high borrowing costs and sluggish growth, Reeves’s determination to re-establish fiscal discipline is understandable. But her commitment to tackle the UK’s chronic economic underperformance sits awkwardly with the prospect of yet higher taxes.

“If tax hikes cause growth to falter and revenues disappoint, the Chancellor could find herself trapped in a self-defeating loop of higher taxes and weaker growth – the fiscal equivalent of treading water while the tide rises.”

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