Chancellor Rachel Reeves has abandoned plans to raise income tax in her upcoming budget, according to reports. The U-turn comes after weeks of internal party turmoil and briefing wars, with Prime Minister Keir Starmer reportedly involved in the decision.
The plan to break Labour's manifesto pledge on income tax had been sent to the Office for Budget Responsibility but has now been scrapped. Downing Street declined to comment on the reports, stating it would not discuss budget matters.
Reeves may now consider freezing personal tax thresholds, a move likely to be seen as a stealth tax rise. The government is expected to rely on smaller tax-raising measures, such as higher levies on gambling, to fill a multibillion-pound fiscal hole caused by lower productivity and policy U-turns on winter fuel allowances and disability benefits.
The decision follows a period of intense speculation about Starmer's leadership, with some allies briefing against Health Secretary Wes Streeting as a potential challenger. Labour MPs had been warned not to speak out against the budget to avoid affecting bond markets, but the U-turn has raised questions about the government's stability.
