Rachel Reeves to ‘wage war with middle England’ over big home tax raid | Politics | News
Rachel Reeves has been accused of waging “class war against Middle England” with plans to slap families in the Budget’s high-value council tax brackets with painful new taxes. The Chancellor is reportedly aiming to increase payments to already cash-strapped households, hitting hundreds of thousands of residents with a surcharge of more than £600 million.
Ms Reeves claimed the country’s finances were suffering from another ‘black hole’ and the Treasury was seeking £25bn to balance the books. But in a dramatic U-turn this week, the Financial Times reported that the Chancellor had abandoned plans to launch an income tax raid that would disrupt Labour’s manifesto pledge.
Now it appears Number 11 is trying to find money elsewhere by revaluing 2.4 million of the most valuable homes in council tax bands F, G and H, which account for one in 10 British homes. Properties in London and the South East could be most affected if the measure comes into force.
Telegram reportsA separate surcharge could be added to existing council tax costs, but it’s still unclear which homes could be affected, potentially leaving millions of people in limbo over whether they can continue to live in their properties through no fault of their own.
Shadow chancellor Sir Mel Stride accused Labor of waging “class war against middle England”. He told the Telegraph: “If Starmer and Reeves decide to launch a new tax raid on family homes, they will punish ambition and hit hard-working people. Nothing is safe under Labor – not your job, your home, your savings or your retirement.”
According to the paper’s analysis, data shows 26 of 296 authorities in England will see more than a quarter of homes revalued, while 15% of all homes in London and the South East will potentially face higher taxes.
Ms Reeves was widely expected to raise income tax in the face of a widening gap in spending plans, and as recently as Monday she signaled the alternative could be “deep cuts” to public investment. But the Financial Times reported that he abandoned those plans for fear that they might anger both voters and Labor MPs.
The decision not to increase the tax was communicated to the Office for Budget Responsibility (OBR) on Wednesday, with the Chancellor presenting a list of “key measures” to be included in his Budget, according to the Financial Times.
An income tax increase would help plug a fiscal black hole estimated by some economists to be as much as £50bn, but would also break Labour’s clear manifesto commitment not to increase income tax, national insurance or VAT. The prospect of a manifesto breach sparked criticism from Labor’s new deputy leader, Lucy Powell, earlier this month, who said it would undermine “trust in politics”.
The Chancellor, who has vowed not to return to “austerity” through deeper spending cuts, may now have to rely on a wider range of smaller tax increases if he is to stick to his own rules on debt and borrowing.
