It’s now official – Labour’s manifesto promises aren’t worth the paper they’re written on. Sir Keir Starmer and Rachel Reeves issued a clear pledge during last year’s general election. Their manifesto said: “We will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT.”
But now, Sir Keir refuses to say he stands by that pledge. Asked by Conservative leader Kemi Badenoch in Parliament whether he stood by the election promise, the Prime Minister simply refused to give a clear answer. It means the Government no longer says it won’t increase National Insurance paid by workers, income tax or VAT. Instead, Sir Keir and his Chancellor are getting their excuses in early.
The official line from Number 10 this week is that the state of the country they inherited from the last Conservative government is “even worse” than they previously realised.
We heard this before, right after the general election in July 2024. Once Labour got into power, Ministers claimed to discover, to their shock and surprise, that the public finances were in a dire situation.
But the message now is that, after more than a year in office, they’ve just realised that things are even worse than that.
And it has nothing to do, according to Labour, with the way Rachel Reeves has managed the economy over the past year. Instead, the blame lies with the last government – people like former Tory Prime Minister Rishi Sunak and former Tory Chancellor Jeremy Hunt – who are somehow still causing trouble today, despite having no power whatsoever.
What’s causing all this is a forecast from Treasury watchdog the Office for Budget Responsibility, which has concluded that productivity in the UK economy is set to grow more slowly than previously expected.
The watchdog will publish its report at the same time as the Budget, on November 26, but details have leaked already.
This dire prediction means Ms Reeves will need to cut spending or raise taxes by more than previously planned. And she doesn’t want to cut spending, not least because it would make her Labour colleagues angry.
So it’s going to be tax rises. And while we don’t yet know what those will involve, she wants the freedom to do more than tinker around the edges.
The Chancellor wants to be free to increase the really big taxes – National Insurance, VAT or income tax. And she’s paving the way to do just this.
It’s possible Ms Reeves still has a clever trick or two up her sleeve. For example, she could increase income tax in a way that hits pensioners in particular.
But what we know for certain is that she no longer feels bound by the promises she made to voters last year, when Labour was trying to win power.