Reeves to lay groundwork for tax rises in candid' speech about budget

"Rachel Reeves will lay the groundwork for a tax-raising budget that could break Labour's election promise on income tax, in a major speech in which she will be candid about the tough choices ahead. The chancellor will give the speech as the markets open on Tuesday, when she will promise to make fair choices at this month's budget but decline to repeat her manifesto pledge of no rise in income tax, VAT or national insurance."

"Keir Starmer told MPs on Monday night it would be a Labour budget built on Labour values and promised it would protect the NHS, reduce debt and ease the cost of living. The prime minister gave MPs a hint at how the government would frame its potential manifesto breach saying it was becoming clearer that the long-term impact of Tory austerity, their botched Brexit deal and the pandemic on Britain's productivity is worse than even we feared."

"MPs in the meeting repeatedly grilled Starmer on whether the budget would lift the two child benefit cap, in what one described as coordinated pressure on the prime minister. While nobody raised concerns over a manifesto breach explicitly, at least one MP spoke about the necessity that the public know what we stand for. However, the absence of any direct confrontation over the manifesto may give Starmer and Reeves some confidence that they are not facing a major backlash from within the parliamentary Labour party."

Rachel Reeves will lay groundwork for a budget that may raise taxes and potentially breach the manifesto commitment against increases in income tax, VAT or national insurance. She will be candid about difficult choices and promise fair decisions at the budget. Keir Starmer framed the budget as grounded in Labour values, pledging to protect the NHS, reduce debt and ease the cost of living, while blaming weak productivity on Tory austerity, Brexit and the pandemic. MPs pressed Starmer on lifting the two-child benefit cap, and strategists aim to prepare markets to minimise surprise ahead of hard fiscal choices.

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