Rachel Reeves will stamp out the last embers of trust in politicians if she listens to big business, breaks a manifesto promise and hikes taxes on working people in this autumn’s Budget. The chief executive of the CBI has urged Ms Reeves not to maintain a “slavish adherence to manifesto promises on tax”.
Labour promised in last year’s election it would not “increase National Insurance, the basic, higher, or additional rates of income tax, or VAT”. You can debate whether the party was wise to bind the Chancellor’s hands in this way but the pledge is unequivocal. To break it after scarcely a year in Government would be a u-turn which would hit the bank balances and living standards of families across the country.
Rain Newton-Smith, the chief executive of the CBI, argues: “The world is different from when Labour drafted its manifesto, and when the facts change so should the solutions.”
The CBI is not alone in worrying about yet more tax hikes to address the black hole – which according to some estimates is bigger than £50billion – in the public finances. Britain’s horse racing sector fears a tax on bets is on the way which would cost the sport £330million over half a decade.
Businesses which are dreading the roll-out of new workers’ rights spearheaded by Angela Rayner will despair if there are further tax raids in the Budget. But abandoning such a key manifesto commitments would damage our democracy.
The belief that Britain’s politicians have a problem with the truth is now deep-rooted in our society. The manifesto will be seen as an outright lie if the Government reneges on its tax pledge.
Labour earned a slippery reputation when it hiked employers’ National Insurance contributions. To many a fair-minded voter, that would have looked like a breach of the manifesto promise.
There was no mention in the manifesto of scrapping universal winter fuel payments, either. For many older citizens, the shock announcement ranks as one of the most horrible post-election surprises in recent memory; farming families are incensed and worried about the unexpected changes in inheritance tax.
But hiking up VAT, income tax or employees’ National Insurance would plunge Sir Keir Starmer’s team into a new depth of infamy.
Doing so would turbo-charge populism in the UK just when Labour is under threat from Zack Polanski’s Greens on the Left and Nigel Farage’s Reform UK on the Right. The Tories have yet to repair the damage caused by partygate and a Labour tax raid on workers would convince millions of Britons that it is time for a clear-out of the political establishment.
If Sir Keir Starmer concludes the country faces such a dire financial crisis that the manifesto must be torn up he should go back to the voters for a new mandate.