Rachel Reeves skewered by BBC host as she admits she will break manifesto tax rise pledge
The Chancellor openly admitted for the first time that Labour is to break the promises it made in its 2024 general election manifesto
Chancellor Rachel Reeves publicly abandoned Labour’s manifesto pledge not to increase taxes on working people, as she insisted sticking to the promises would harm the economy. She confirmed reports that the promise not to increase “National Insurance, the basic, higher, or additional rates of Income Tax, or VAT” will be ignored in her Budget on November 26 – but was told by a BBC interviewer that voters are “sick and tired” of politicians going back on their word.
The Chancellor said: ”We are looking at both taxes and spending as part of this Budget.” It suggests that there will be tax rises and spending cuts, though Ms Reeves did not confirm reports that income tax could increase by up to 2p and insisted “final decisions haven’t been taken yet”.
Speaking to the BBC’s Matt Chorley on Radio 5 Live, she said: “It would, of course be possible to stick with the manifesto commitments, but that would require things like deep cuts in capital spending and the reason why our productivity and our growth has been so poor these last few years is because governments have always taken the easy option to cut investment – in rail and road projects, in energy projects, in digital infrastructure.
Chancellor Rachel Reeves delivers her Budget on November 26 (Image: Getty)
“And as a result, we’ve never managed to get our productivity back to where it was before the financial crisis.
“So we’ve always got choices to make, and what I promised during the election campaign was to bring stability back to our economy, and what I can promise now is I will always do what I think is right for our country.”
Ms Reeves said her priorities in the Budget would be to bring down NHS waiting lists, to bring down the cost of living and also to bring down our national debt.
She said the UK’s economy was growing too slowly, but admitted she knew that increasing National Insurance contributions for employers would damage businesses before announcing the tax rise last year.
The Chancellor said: “I recognised that those decisions to increase taxes in the Budget last year would have impact on business and on the wealthiest, whose taxes we increased. What I would say is doing nothing wasn’t an option.”
Matt Chorley highlighted warnings from Labour Deputy Leader Lucy Powell that abandoning the manifesto pledge would damage trust in politics, and suggested voters are “sick and tired of politicians saying one thing and doing another.”
But Ms Reeves said date from the Office for Budget Responsibility, not yet officially published, would show productivity growth was slower than expected, while the economy had also been hit by “global issues” such as wars overseas and Donald Trump’s tariffs. She said: “We need to spend more on defence. That’s becoming increasingly clear.” She added: “I don’t think anyone could have foreseen when this government was elected last year that we were going to be seeing these big increases in global tariffs and barriers to trade.”
The Chancellor is believed to be planning to increase income tax, possibly while cutting National Insurance by the same amount. This would mean many working-age people in employment pay roughly the same amount of tax, but would mean higher bills for pensioners, landlords and the self-employed.
In addition, she is considering ending “salary sacrifice” schemes used by many workers to help them save into a pension. Axing this would increase National Insurance bills for some working people, meaning they either take home less pay or save less for retirement.
Cabinet colleagues have privately warned that increasing income tax, after promising not to in last year’s manifesto, could guarantee defeat at the next election. They compared it to the Liberal Democrats backing university tuition fee increases in 2010, despite previously pledging to oppose any rise, a decision that contributed to the Lib Dems losing nearly all their seats five years later.
Labour MP Catherine West, a member of the Treasury Committee, issued warning in public. She said: “If I were Rachel, I think I wouldn’t be breaking the manifesto promise. I feel that there is a lot of anger out there at the moment.”
And she said: “Well, I just think back to the Liberal Democrats and the university fees, because that was, you know, the big one for me that I remember and was very important for me. That’s how I won my seat, because I won that from the Liberal Democrats. So I think those big ones, they do come back to haunt you.”
Last week Labour deputy leader Lucy Powell suggested breaking the pledge not to raise income tax, national insurance or VAT would damage “trust in politics”.
Ms Reeves is also under pressure from leaders in the North of England to provide funding for a planned new rail line linking Manchester and Liverpool, which could be extended to Crewe and the north east.
The Northern Powerhouse Rail was expected to be confirmed at last month’s Labour conference in Liverpool but was delayed, and there now reports it could be delayed again. Mayors have signed a letter arguing Ms Reeves to deliver the scheme to create a “spine that connects the North
It was signed by Labour mayors Andy Burnham, leader of Greater Manchester, Liverpool City Region mayor Steve Rotherham, North East Mayor Kim McGuinness and West Yorkshire Mayor Tracy Brabin, as well as Luke Campbell, the Reform mayor of mayor of Hull and East Yorkshire, and local Liberal Democrat leaders.
