Rachel Reeves has confirmed she will increase income tax | Politics | News

Rachel Reeves has confirmed she will increase income tax in the 26 November Budget. The Chancellor told budget watchdog the Office for Budget Responsibility (OBR) that higher personal taxation was one of the “major measures” in his statement next month, The Times reported.

The OBR is tasked with assessing the impact of measures and presenting its findings to the Treasury. While a tax rise has been widely predicted, it means Ms Reeves will not keep a promise made in Labour’s General Election manifesto not to increase income tax, National Insurance or VAT.

The Chancellor could increase income tax while cutting National Insurance by the same amount. This would allow him to argue that he wasn’t increasing taxes on “working people” because their total tax bill would remain about the same; but pensioners and the self-employed who do not generally pay National Insurance will pay more.

The Chancellor’s decision comes despite demands from some Labor colleagues, including Labor Deputy Leader Lucy Powell, for the Government to honor the promises made in Labour’s election manifesto.

Speaking to Matt Chorley on BBC Radio 5 Live, Ms Powell said: “Of course we have to follow our manifesto. There’s no doubt about that.”

He added: “Trust in politics is an important part of this because if we’re going to take the country on our side they need to trust us and that’s really important too.”

Former Cabinet minister Ms Powell, who was sacked by Sir Keir during the cabinet reshuffle, defended her position as the party’s deputy leader against Education Secretary Bridget Phillipson, who is seen as the Prime Minister’s preferred choice.

Critics say the Chancellor has already broken his election promise by increasing National Insurance paid by employers in last year’s Budget.

Prime Minister Sir Keir Starmer refused to confirm the pledge was still valid when questioned in the House of Commons.

Other Budget announcements could include a move towards a pay-per-kilometre road pricing scheme as the use of electric cars threatens to reduce petrol taxes, a vital source of revenue for the Treasury.