Did Rachel Reeves break her manifesto pledge on tax? Her own words suggest she did
The chancellor claimed during his morning media rounds on Thursday that he had technically failed to deliver on his manifesto promise not to increase income tax, VAT or national insurance contributions “for working people”.
Rachel Reeves’ claim is that she kept her promise despite the fact that, if tax rates remain the same, hundreds of thousands of people will have to pay higher income taxes due to financial hardship.
The manifesto said: “Labour will not increase taxes on employees, so we will not increase national insurance, basic, higher or additional income tax rates or VAT.”
Asked if he had delivered on his manifesto promise, he replied: “I accept that yesterday I asked working people to contribute a little more by freezing these thresholds for another three years from 2028. I accept that this will mean working people will pay a little more.”
Asked again whether Labor had broken its manifesto promise not to raise taxes on workers, she said: “If you read the next line, it’s talking about rates. But I don’t deny that it has an impact on working people.”
For the 1.7 million people who will see their tax bills increase as a result of freezing the income tax threshold, this is likely to seem like a hollow and semantic argument.
And they have a powerful ally who admits Labor has in fact broken its promise: the Chancellor himself.
He told MPs in his 2024 Budget speech: “I have concluded that extending the threshold freeze would harm working people. It would result in more money being taken off payrolls.”
“I keep every promise I made in our manifesto regarding taxes.”
This is the second year in a row that Ms. Reeves has used semantics to excuse a clear breach of her manifesto commitment.
Last year’s huge increase in employers’ national insurance contributions broke the manifesto commitment, which actually only listed national insurance and did not distinguish between employee or employer contributions.
But he and Labor insisted at the time that only employee contributions were covered because the focus was on “working people”.
The breach of commitment is probably best highlighted by the change in language in the Budget speech.
Until recently, both sentences specifically mentioned “working people”, whether uttered by Ms Reeves, the prime minister or another senior minister.
But now the language has largely given way to “justice,” with almost no reference to “working people.”
Perhaps part of the problem may be that Ms Reeves and Labor have never really been able to define who “working people” are, with the Treasury assuming at one point that they are simply people earning less than £45,000 a year.
The question embarrassed both the chancellor and Sir Keir Starmer when asked to describe this core group.
So “working people” and “economic growth” (now the number one mission of this government) have been relegated to footnotes.
This reflected a left turn by a chancellor who wanted to keep his job and save his boss from a possible coup.
Critics point out that working people appear to be less of a priority than those on benefits, with the benefits bill set to rise by £73bn to more than £400bn by 2030, and pensioners who retain the triple lock guarantee on their state pension and are exempt from new limits on cash ISA savings imposed on employees.
Ms Reeves and her colleagues will struggle in the coming days and weeks as they try to use semantics to justify a Budget that runs counter to much of what they promised at last year’s election, as their own past words will catch up with them.
He said the media and the Conservative Party “won’t write his own obituary”, but perhaps he really did write his own obituary.
