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Rachel Reeves has paved the way for manifesto-breaking tax rises - saying voters will understand the financial pressures she faces. In an unusual pre-Budget speech in Downing Street this morning, Ms Reeves said she has to "face the world as it is, not the world I want it to be". And asked if she was prepared to lose the next election by making unpopular choices, she vowed to "put the country first". Ms Reeves hit out at Reform and the Tories as she refused several times to hose down reports that tax rises are on the way. She said it would be possible to slash public funding or ramp up borrowing - but that would be the wrong thing to do. Here we look at some of the things we learned from her address. The Chancellor repeatedly refused to stand by Labour's election vow not to hike income tax, VAT or national insurance at the Budget . Ms Reeves said she will "not always do what is popular - but do what is right". And she stressed that "we will all have to contribute" to repairing the public finances. Asked if raising taxes would make a mockery of Labour's election promises, Ms Reeves refused to hose down the idea. She said: "I will set out the individual policies at the Budget on November 26. That's not what today is about, today is about setting the context for Budget." The Chancellor said in her speech: "As Chancellor I have to face the world as it is, not the world as I want it to be. And when challenges come our way, the only question is how to respond to them, not whether to respond or not." She went on: "If we are to build the future of Britain together, we will all have to contribute to that effort. Each of us must do our bit for the security of our country and the brightness of its future." Ms Reeves took aim at the Tories for delivering a "hammer blow" to the economy, accusing them of chasing easy solutions rather than doing the legwork finances on track. She said: "The decision to pursue a policyof austerity after the financial crisis dealt a hammer blow to our economy, gutting public services and severing the flows of investment that would have put our country on a path to recovery. "The years that followed were characterised by instability and indecision, with crucial capital investment continually sacrificed and hard decisions put off again and again. "And then a rushed and ill conceived Brexit that brought further disruption as businesses trying to trade were hit with extra costs and paperwork." Asked if she was prepared to lose the next general election in order to get finances in order, Ms Reeves said she was. The Chancellor was told that governments that break pledges are often turfed out. She responded: "We've got to do the right things. The problem of the last 14 years is that political expediency always put above the national interest. "That's the reason we're in this mess." She went on: "If you're asking me what comes first, national interest or political expediency, it's national interest every single time with Labour , and that's the same for Keir Starmer too." Ms Reeves had a dig at Reform, who are expected to ask for more council tax in Kent despite promising efficiency savings. The Chancellor said in her speech: "I will continue to drive for more productive and more efficient public services right across government, making savings and rooting out waste wherever I find it. "Now my opponents will tell you that they could do more. Reform who promised savings from our public services. And yet, in Kent County Council and councils they run across Britain apparently they can't find a single penny and instead are going to increase council tax for more than 2 million people." And digging out the Tory pledge to axe £47billion of public spending, she said: "There is no way that cuts on that scale - equivalent to cutting all of our armed forces or cutting every single police officer in the country twice over - could be delivered without devastating consequences for all public services." The Chancellor blamed global problems including the tariff war triggered by US President Donald Trump and domestic issues including the budget watchdog's expected downgrade of economic productivity for the "hard choices" she will make. She said: " I put our public finances back on a firm footing, provided an urgent cash injection into our faultering public services and began rebuilding our economy. "But since that budget, the world has thrown even more challenges our way. The continual threat of tariffs has dragged on global confidence, deterring business investment and dampening growth. "Inflation has been too slow to come down as supply chains continue to be volatile." This meant costs of everyday goods have been "too high", she said. Ms Reeves was asked how important it was to her that politicians stick to promises. She replied: "I think it is important that people are honest and I think, as I said, everyone can see that this year has thrown many more challenges our way. "It would be possible, to cut capital spending, to change the fiscal rules, to make the numbers superficially add up. But I'm not going to say that will be the right thing for our country... "I believe that in the end the public will respond better to doing the right thing rather than just the expedient thing." Ms Reeves said the Government remains "committed" to welfare reform. The Chancellor was forced to scrap a disability benefit shake-up earlier this year following a backbench rebellion. But she stressed that the battle is not over. " The Prime Minister, the Secretary of Work and Pensions and this whole government committed to reforming our welfare state," she said. "So this is not a system that counts the costs of failure, but one that invests in success and protects those who need it most. "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." Ms Reeves was asked if people should be able to claim benefits on the basis of anxiety. It comes after Reform announced it would clamp down on such welfare payments. The Chancellor replied: "I think that is in the end up to, health practitioners to decide and to make those, decisions. We do know that there are many young people who are struggling with mental health, particularly since the pandemic." She continued: "I believe we need to give more opportunities to young people, and young people with mental health issues, including anxiety, are much better served if they are given the support to get back into work rather than just being left on out of work and sickness benefits, which is a waste of their potential." Pressure is mounting on the Chancellor to scrap the two-child benefit limit, which restricts access to welfare payments like Universal Credit to the first two children in a family. Asked if there would be good news, Ms Reeves said: "If you spend more on one thing, there's less money to spend on something else. I've always been really clear about that. "There isn't a magic money tree for any type of spending and any decisions in one area will have consequences for other areas as welll. The most impactful thing in the Budget.. will be determined by productivity." Ms Reeves was asked about a housing error which have led to calls for her to be sacked. Last week it emerged she had let out her family home in South London without getting a licence, as required by Southwark Council. Her estate agent later held up its hand and said it was to blame for the error. But Ms Reeves had initially told Mr Starmer she was unaware of the requirement before more details came to light. She told reporters: "On the issue of housing, there was an exchange of letters last week between myself and the Prime Minister and the Prime Minister's ethics advisor has passed his judgement. "I don't have anything more to say than that."
