In a move that could shatter Sir Keir Starmer's carefully crafted fiscal promises, one of his most senior economics advisors has openly advocated for increases to income tax and VAT. Lord Jim O'Neill, the former Treasury minister and a key figure in Starmer's economic circle, stated that the Labour leader should not rule out hiking these major taxes to secure funds for vital public "investment."
Breaking from the Party Line
This controversial stance directly contradicts the current official position of the Labour Party. Throughout his leadership, Sir Keir and Shadow Chancellor Rachel Reeves have repeatedly vowed not to raise the rate of income tax, National Insurance, or VAT for "working people." This pledge has been a cornerstone of their strategy to position Labour as the party of fiscal responsibility and to win the trust of voters.
Lord O'Neill's comments, made in an interview, throw this entire strategy into question. He argued that a future Labour government should be open to all options, stating: "I don't think he should rule out [raising income tax or VAT]... If you're going to get the economy growing and you're going to get the kind of investment that you need in some of our obvious big weaknesses, then you've got to be open-minded."
The Conservative Response
The Conservative Party was quick to seize upon these remarks. Chief Secretary to the Treasury, John Glen, immediately labelled it a "tax bombshell" and warned that it revealed Labour's true intentions. He stated that the comments expose a secret plan to raise taxes on hard-working Brits, undermining Labour's public claims of economic prudence.
A History of Controversial Views
This is not the first time Lord O'Neill's views have caused a stir. The respected economist, who served under David Cameron and George Osborne, has previously expressed support for the controversial "mansion tax" on high-value properties—a policy long since abandoned by the Labour leadership. His latest intervention suggests a potential internal divide between Starmer's pragmatic advisors and the party's publicly stated, cautious fiscal rules.
With a general election looming, this public airing of internal debate threatens to derail Labour's efforts to maintain a consistent and disciplined message on the economy, an area where they have traditionally been vulnerable to Conservative attacks.
