'£25bn tax bomb' and 'Tory fight veers right'

Chancellor Rachel Reeves has been warned by a leading thinktank that taxes will need to raised by £25bn to prevent a return to austerity

Several papers lead on the estimate by the Institute for Fiscal Studies that taxes will need to rise by up to £25bn in the budget if Labour is to meet its pledge to protect public spending.

The IFS has “calculated the cost of avoiding austerity”, according to the Times, which explains that taxes would need to rise by twice as much as in George Osborne's budget in 2010 - even if rules on borrowing are loosened.

The Daily Telegraph says the £25bn gap has been partly driven by a bigger-than-forecast increase in population of about 1m, and Chancellor Rachel Reeves's decision to give public sector workers higher-than-inflation pay deals.

A number of papers note the prime minister's refusal in the Commons on Wednesday to rule out putting up employers' national insurance. The Financial Times says Sir Keir Starmer has “opened the door” to a multi-billion pound rise, which could involve levying national insurance on employer pension contributions.

The Guardian reports that Treasury officials are examining the move, which could raise up to £17bn annually, while a pensions specialist at the consultants PWC tells the FT there could be implications for employee salary sacrifice schemes.

The Daily Mail says there's fury among business leaders about “Labour's revolution for workers” - also known as the Employment Rights Bill - which will be introduced to the Commons on Thursday.

The Federation of Small Businesses is quoted warning that new protections from unfair dismissal will deter bosses from taking on new recruits, in case they end up facing a tribunal when someone simply isn't suited to the role. Writing in the Daily Mirror, Deputy Prime Minister Angela Rayner says the reforms are “personal” for her - and show the government is delivering for working people.

The lead story for the Daily Express is that some pensioners - who are losing their winter fuel payment - are among more than 100,000 people who have been dragged into paying income tax because of frozen thresholds. The former Lib Dem pensions minister Sir Steve Webb, who obtained the data from HMRC, tells the Express it's time personal allowances were raised. The campaign group Silver Voices urges Labour to borrow a Conservative proposal, for an age-related tax allowance.

In other news, the Daily Telegraph proposes five possible explanations for the shock elimination of James Cleverly from the Conservative leadership contest. By far the most complex of these involves supporters of Robert Jenrick backing Cleverly in previous rounds, lulling his team into a false sense of security, the paper explains. The Telegraph's leader column says the Conservatives “never cease to surprise” when it comes to selecting a leader. The paper points out that neither Robert Jenrick nor Kemi Badenoch have the backing of the majority of Tory MPs, something it says “may yet prove problematic”.

The Daily Star leads on a study that claims office tea-makers are in effect accruing an extra eight days' holiday a year, through repeated trips to put the kettle on. Smokers gained six days while habitual latecomers built up three. The Tea Advisory Panel, which promotes the benefits of tea, insists to the Star that having a brew at work raises morale, and allows for reflection.

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