Government in Chaos as Chancellor Performs Dramatic Tax U-Turn
In an extraordinary display of political volatility, Chancellor Rachel Reeves has completely abandoned plans to raise income tax just ten days after publicly signalling the controversial move. The dramatic reversal has left the Labour government's financial and political credibility in tatters mere weeks after taking office.
The Chancellor's about-face creates a major crisis for Sir Keir Starmer's administration, which won power promising to restore stability after the turbulent Johnson and Truss years. Instead, the government appears to be descending into the very chaos it pledged to end.
From Certainty to Confusion: The Timeline of a Budget Farce
On 4th November 2025, Reeves broke with established Treasury tradition by inviting television cameras into 11 Downing Street during the pre-Budget "purdah" period. In an unprecedented move, she clearly indicated her intention to break Labour's election pledge not to raise the basic rate of income tax.
Yet late on 13th November, Financial Times journalists revealed that the Chancellor had "ripped up" those plans entirely following a significant public backlash. The sudden reversal came after Bloomberg's Alex Wickham reported that Reeves found herself "unable to make final decisions" due to intense Cabinet arguments.
The timing couldn't be more critical, with the crucial Budget announcement scheduled for 26th November 2025 - just twelve days from the latest developments.
A Pattern of Instability Emerges
This income tax reversal represents the latest in a growing list of government U-turns that have characterised the early days of the Starmer administration. The government previously abolished winter fuel payments for the elderly only to reverse the decision, and promised billions in welfare reform savings before similarly backtracking.
Meanwhile, 10 Downing Street has been rocked by internal scandals, including poisonous briefings against Health Secretary Wes Streeting, adding to the sense of a government struggling to maintain basic discipline.
As one backbencher texted Politico: "Reeves and Starmer have been warning MPs that the gilt markets are watching us like hawks... And now we read they're dropping their biggest revenue-raising measure from the budget with two weeks to go."
What Comes Next?
The fundamental question now facing the government is: who is actually in charge? The Chancellor's apparent inability to stick to major financial decisions raises serious concerns about her authority and the government's economic competence.
With public finances under significant pressure, the certainty of an income tax rise has been replaced by the certainty of other, as yet unknown tax rises. The temporary relief felt by taxpayers will likely be short-lived as the reality of the government's financial challenges sets in.
The sad reality, as one observer noted, is that confidence in Rachel Reeves and the prime minister is now so low that few will be sure she won't tear up her own Budget just ten days after delivering it. This is a government adrift, and it's no way to run a country.
