Starmer declines to rule out breaking manifesto tax pledges

The prime minister has declined to stand by his manifesto commitments not to raise key taxes at next month's Budget.

Sir Keir Starmer did not repeat the promise not to raise income tax rates, VAT or National Insurance during Prime Minister's Questions.

Conservative leader Kemi Badenoch argued it showed tax rises are on the way, adding that Labour was "too weak" to control public spending instead.

It comes amid increasing speculation that the chancellor could break Labour's manifesto pledges, as she seeks to raise billions of pounds to plug a Budget shortfall.

Rachel Reeves is widely expected to raise taxes at the Budget on 26 November, after gloomy economic forecasts and a series of U-turns on welfare cuts made it harder for her to meet her own tax and spending rules.

As recently as July, Sir Keir had insisted he stood by his manifesto tax promises, simply answering "yes" when asked by Badenoch at a previous PMQs session in July.

By the end of last month, ministers said "the manifesto stands today".

But asked the same question on Wednesday, the prime minister only replied that the government would "lay out our plans" at next month's Budget.

Noting that after his previous answer, Sir Keir had sat down with a "smug grin on his face", Badenoch taunted: "What's changed in the past four months?"

Speaking to reporters after PMQs, Sir Keir's spokeswoman also repeatedly declined to repeat the pledge, adding she could not "pre-empt" the Budget.

Income tax arguments

Labour's 2024 election manifesto pledged not to raise the basic, higher, or additional rates of income tax, or National Insurance - prompting a row last autumn when it announced a hike in the contributions paid by employers.

It also promised not to raise Value Added Tax (VAT), a sales tax, although the manifesto did not specify whether this applied to the rates, or which products are subject to the charge.

The chancellor has not ruled out continuing to freeze income tax thresholds beyond the 2028 date fixed by the last government, allowing more people to be dragged into higher bands as their wages rise over time.

The manifesto pledges not to raise these taxes - the biggest revenue-raising options available to the Treasury - has considerably reduced Reeves's room for manoeuvre ahead of the 26 November Budget.

Some senior Labour figures are privately suggesting to Reeves that now is the time in the Parliament to make the case for putting up income tax.

They argue it is still years until the general election, it could raise a lot of money and, unlike more targeted tax rises such as last year's changes to inheritance tax on farmland, would not create a single noisy lobby group in opposition.

But the idea leaves other Labour figures deeply nervous because it would amount to a spectacular breach of their pre-election promise, which ministers have repeated many times since.

Some also worry it could depress the economy further at a time of weak economic growth.

Brexit blame game

Reeves announced tax rises worth £40bn a year at her first Budget last November, including hikes to National Insurance paid by employers, and insisted she would not have to repeat the move in subsequent years.

But the chancellor recently admitted she is looking to raise taxes again in a bid to put the UK's finances on a firmer footing.

It is understood the Office for Budget Responsibility (OBR) is set to revise down its predictions for productivity of the UK economy, leading to a £20bn gap in meeting her tax and spending rules.

Sir Keir told MPs the downgrade showed the "true extent of the damage" done to the economy by the Conservatives, citing "austerity", Brexit and the mini-Budget under Liz Truss in September 2022.

Badenoch rejected this, and hit back that the prime minister was more prepared to "dip into people's pockets" than upset Labour MPs by cutting welfare spending.

"He is raising taxes because he is too weak to control spending. He's blaming us. He's blaming the OBR (Office for Budget Responsibility)," she added.

"Last week, they were blaming Brexit. Isn't the truth that with this prime minister, it's always someone else's fault?"

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