Chancellor’s own pledge-breaching tax plan ripped to shreds by her own words
Rachel Reeves has flipped from her position last year (Image: Parliament Live)
Rachel Reeves was torn apart at Prime Minister’s Questions – not by Tory leader Kemi Badenoch, but by her own words. The Leader of the Opposition demanded answers from the PM over his Government’s imminent Budget, after last week’s farcical U-turn over plans to hike income tax.
However, Sir Keir Starmer refused to rule out freezing income tax and National Insurance thresholds, which would drag tens of thousands of hard-working Britons into higher tax bands. While Mrs Badenoch condemned the Chancellor as “clueless” and accused the Government of “making it up as they go along”, the most damning attack on the plan came from Ms Reeves’s own mouth. Mrs Badenoch dug up comments made during last year’s Budget, in which Ms Reeves vowed to unfreeze the tax thresholds from next year.
Kemi Badenoch skewered the Chancellor for changing her mind (Image: Sky)
A year ago, the Chancellor argued: “I have come to the conclusion that extending the threshold freeze would hurt working people.
“It would take more money out of their pay slips.”
As Mrs Badenoch pointed out, “yet that is exactly what they’re planning to do next week.”
In Labour’s 2024 election manifesto, the party promised not to raise taxes on working people – specifically income tax, VAT, and National Insurance.
While the Chancellor has now ditched her plans to raise income tax, many claim that freezing the thresholds at which people pay tax is also a manifesto breach.
In 1991, just 3.7% of working-age Britons aged 16 and over paid the higher 40% rate of tax. Today, that number is an eye-watering 16.1%.
A tax initially envisioned to apply to bankers and city professionals is now paid by doctors and teachers. Every year the thresholds remain frozen, more and more struggling taxpayers will be dragged into its grasp, never to be released.
The PM refused to rule out the freeze (Image: Parliament)
When the Chancellor confirms the move next Wednesday, it will also be bleak for pensioners.
Given the Government’s commitment to the triple lock, millions of pensioners will be subject to income tax for the first time on their basic state pension by the next election.
According to the Institute for Fiscal Studies, extending the tax threshold freeze for another two years, up to 2030, will deliver the Treasury an additional £8.3billion a year of so-called stealth taxes.
Ms Reeves will be hoping that, once again, she, as Chancellor, will be stealthy when hiking everyone’s taxes at the Budget.
As Wednesday’s performance by Mrs Badenoch showed, it is the Tories’ sole mission to not let her get away with it.
