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Sir Keir Starmer has opened the door to raising income tax in an explicit breach of Labour’s manifesto. At Prime Minister’s Questions, Sir Keir also refused to repeat the party’s commitments not to raise VAT or National Insurance at the Budget next month. If Rachel Reeves increases these taxes, it would be the first time Labour has broken an election pledge. The party’s 2024 election manifesto promised: “Labour will not increase taxes on working people, which is why we will not increase National Insurance, the basic, higher, or additional rates of income tax, or VAT.” Sir Keir’s refusal to say whether he would honour the pledge contrasts sharply with his PMQs answer in July that the manifesto “stands”. The Chancellor is being forced to consider tax rises or spending cuts in November’s budget as she struggles to fill a £30bn black hole. Other ideas reportedly floated include an annual mansion tax on houses worth £2m or more, and freezing the thresholds of income tax and NI bands so more people are dragged into higher taxes as their income increases. It comes at a time when Labour is already performing historically poorly in the polls: a YouGov survey this week put the party at its lowest ever rating: 17 per cent, tied with the Tories. Meanwhile, the CBI warned on Wednesday that firms across the private sector expected activity to fall in the next three months. Sir Keir’s hint about income tax came after Kemi Badenoch asked him whether he stood by his manifesto promises. The Conservative leader said: “Last year, in its manifesto, Labour promised not to increase income tax, not to increase National Insurance and not to increase VAT. Does the Prime Minister still stand by his promises?” Sir Keir sidestepped the question, saying: “I’m glad the Leader of the Opposition is finally talking about the economy. “Growth has been upgraded this year and the UK stock market is at an all-time high. “The Budget is on Nov 26 and we will lay out our plans. But I can tell the House now that we will build a stronger economy, we will cut NHS waiting lists and deliver a better future for our country.” Mrs Badenoch replied: “Well, well, well, what a fascinating answer. It is not the same answer I received when I asked exactly the same question word-for-word on July 9. “Income tax. VAT. National Insurance. Four months ago, the PM ruled out raising these taxes. “Today, he won’t. Why? Because Labour’s high taxes and out-of-control spending have wrecked the economy, and they’re coming back for more. Nobody voted for this.” Asked four months ago by Mrs Badenoch whether he would rule out the tax rises, Sir Keir replied to the same question with “yes” before immediately sitting down again. Later on Wednesday, the Prime Minister’s press secretary also refused to confirm that the Labour manifesto “stands” on VAT, National Insurance and income tax. She told reporters: “You have the Prime Minister’s words in the House, and you have the Chancellor’s words from today. “The Budget is on Nov 26. We’re still waiting for the OBR’s [Office for Budget Responsibility] final forecasts and we’re not going to pre-empt the Budget.” Gareth Davies, the shadow financial secretary to the Treasury, said: “Keir is out of ideas and refusing to commit to not raising taxes again. “Instead, he could follow our recommendation to scrap stamp duty to back our young people as the basis for our future national prosperity.” During Wednesday’s questions in the Commons, Sir Keir refused to rule out extending the freeze on tax thresholds, which would amount to an effective breach of his manifesto promise. A freeze on National Insurance and income tax thresholds introduced under the Conservatives is set to end in April 2028. Sir Keir was asked by Mike Wood, a Tory frontbencher, to “prove the media speculation wrong” and rule out extending the freeze. But he was unable to do so, saying instead: “The freeze was introduced by them, that’s why it was coming in next year.” On Wednesday, the CBI said that firms across the private sector expect activity to fall in the next three months, extending a run of negative predictions that began in late 2024. Alpesh Paleja, the organisation’s deputy chief economist, said: “Firms are facing a difficult winter, with private sector momentum weak and confidence fragile. “Uncertainty around the upcoming budget is weighing heavily on sentiment, with many firms keeping key decisions on hold until more clarity is forthcoming. Cost pressures from a variety of sources remain strong, with last year’s tax rises adding to the drag.” Andrew Griffith, the shadow business secretary, said: “This is yet more bad news for our economy, courtesy of Rachel Reeves. “Her tax hikes have hit businesses hard, trampling any green shoots of growth underfoot and driving up inflation and unemployment in the process. “And she is plotting more cash grabs at the upcoming Budget, bringing more misery to employers and employees alike.”
