Prime Minister Keir Starmer has refused to rule out tax rises in next month's budget, fuelling speculation that Chancellor Rachel Reeves is considering raising income tax to address a £30bn shortfall. During Prime Minister's Questions, Conservative leader Kemi Badenoch pressed Starmer on Labour's manifesto pledge not to increase income tax, national insurance, or VAT.
Badenoch asked: “Last year in its manifesto, Labour promised not to increase income tax, not to increase national insurance and not to increase VAT. Does the prime minister still stand by his promise?” Starmer gave a lengthy answer about the economy but did not mention tax, a shift from his previous one-word response of “Yes” on 9 July.
Badenoch noted the change, saying: “That is a fascinating answer. It is not the same answer that I received when I asked exactly the same question, word for word, on 9 July. Then the prime minister replied with just one word, ‘Yes’, and then he sat down with a smug grin on his face. What’s changed in the past four months?”
Starmer responded: “As she well knows, no prime minister or chancellor will ever set out their plans.” He added: “They broke the economy. We’re fixing it.” His press secretary later declined to reaffirm the manifesto commitments, stating: “We’re not going to pre-empt the budget.”
The Guardian revealed earlier this month that Reeves is in active discussions about potentially raising income taxes. Some Treasury and No 10 advisers believe this may be the only way to raise enough money to avoid further tax rises in this parliament, though Reeves is reportedly nervous about the political fallout from breaking another key pledge.
