Rachel Reeves has launched a defence over her two tax-heavy Budgets, claiming they enabled a “stronger fiscal buffer” and shifted the “tax system towards rewarding work”.

In her first major speech since been ousted as Chancellor, Reeves said she made “difficult choices” that were “not without controversy” but defended them as helping end the UK’s “failed austerity experiment”.

Reeves raised taxes by £66bn across her two Budgets through targeting businesses, the wealthy and savers. In the Office for Budget Responsibility report following her 2025 Budget, it was forecast that Britain’s tax-to-GDP ratio would reach a post-war high of 38.3 per cent of economic output.

“In my two Budgets, I raised taxes to build a stronger fiscal buffer and to invest in public services,” Reeves said, defending her record in a speech at Harvard University.

“There was no way to raise revenue on the scale required which would be free of pain.”

Reeves raised her fiscal headroom to £24bn in the 2025 Budget, which she added allowed current Chancellor John Healey to provide cost-of-living support in his Budget last week. Healey maintains a £15bn buffer following his first fiscal statement.

Reeves renews calls to rejoin the EU

The Leeds West and Pudsey MP said she helped “shift the tax system towards rewarding work, enterprise and investment, rather than the passive accumulation of wealth” and broke Britain’s “low-wage, low-investment cycle”.

One of Reeves’ most controversial measures was the increase of employers’ national insurance to 15 per cent, from 13.8 per cent. The secondary threshold, which reflects the rate at which employers start paying national insurance on an employee’s salary, was simultaneously slashed to £5,000 from £9,100.

Bank of England governor Andrew Bailey has previously warned that the tax hike was helping push up prices and raise unemployment. Britain’s unemployment rate reached a five-year high of 5.2 per cent under Reeves’ Chancellorship at the end of 2025.

During her Harvard speech, Reeves renewed calls for Britain to rejoin the European Union, claiming the 27-state bloc was the “single biggest opportunity” to raise income and strengthen Britain’s security.

“No agreement, with any one country or any other group of countries, can compensate for Britain’s distance from our nearest and largest trading partner,” she said.

“I firmly believe Britain’s future lies inside the European Union. Economically, it is the credible choice. Britain’s values, and a serious assessment of the geopolitical scene today, tell us it is the radical choice too.”