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During Prime Minister’s Questions, Sir Keir Starmer did not reaffirm the commitment made in the manifesto of not raising income tax rates, VAT, or National Insurance. This raised concerns that tax increases may be imminent, with Conservative leader Kemi Badenoch criticizing Labour for being “too weak” to handle public spending. There is speculation that the chancellor, Rachel Reeves, may need to deviate from Labour’s manifesto pledges to generate billions of pounds to cover a Budget shortfall.
In July, Sir Keir had previously confirmed his support for the manifesto tax promises, but the prime minister recently only mentioned that the government would reveal its plans at the upcoming Budget. This change in stance prompted Badenoch to question what had shifted in the past four months. There is anticipation that tax increases will be announced at the Budget on 26 November due to economic forecasts painting a bleak picture and challenges in meeting tax and spending rules.
Labour’s 2024 general election manifesto had vowed not to raise income tax rates or VAT, as well as to refrain from increasing National Insurance. These pledges limited Reeves’s flexibility when preparing for the Budget. Some within Labour are privately advocating for an increase in income tax, arguing that it could yield substantial revenue without encountering strong opposition. However, other Labour members are apprehensive about this move as it would break their pre-election promise and potentially worsen the economy’s already feeble growth.
Following tax rises implemented last November, Reeves has acknowledged the need to raise taxes again to strengthen the UK’s financial position. A projected shortfall in meeting tax and spending rules due to reduced productivity forecasts for the UK economy may necessitate tax hikes once more. Sir Keir attributed this economic strain to the Conservatives, pointing to factors such as austerity measures, Brexit, and decisions made under Liz Truss’s leadership. Badenoch countered by accusing the prime minister of resorting to tax increases out of an inability to control spending, redirecting blame to others for the financial challenges faced
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