Starmer to face cabinet backlash if he breaks manifesto pledge on income tax
Keir Starmer and Rachel Reeves will face a cabinet backlash if the Chancellor continues rumors of breaking a Labor manifesto pledge and increasing income tax in the budget.
It was reported earlier this week that the Treasury was exploring the possibility of increasing interest rates by 2p while also reducing national insurance by 2p. Independent Last month it was reported that Ms Reeves was considering changes to the top rate of 45p.
Independent It has learned that some senior ministers are concerned that failing to deliver on a manifesto pledge not to increase income tax, VAT or workers’ national insurance contributions could hinder hopes of a political recovery, with the party remaining weak in the polls.
“What those who say we shouldn’t stick to that promise fail to realize is how important that is in winning the election,” said a senior minister.
“It’s hard to win elections. It’s especially hard for the Labor Party to win. We can’t win many of them.
“So breaking that promise carries a significant risk that we will lose the trust of voters.”
Another minister suggested: “If people don’t believe what we say, we’ll have a hard time rallying at the ballot box.”
The analysis is shared by leading pollsters, including Professor Sir John Curtice, who liken it to the “tuition fee moment” that devastated the Liberal Democrats in 2010, when they trebled after promising to scrap them at the election.
Sir Keir’s government has doggedly stuck to its tax promise for months, but when asked directly by Tory leader Kemi Badenoch on Wednesday whether he would deliver on that promise, the prime minister refused to say.
But as the chancellor is running out of options, facing a £30bn to £40bn black hole in his spending plans, economists have urged him to bite the bullet and raise income tax rather than try a “mess” of smaller taxes.
But some cabinet ministers would prefer the chancellor to “look again at wellbeing” and find savings across departments in the overall budget of £1.3 trillion.
Senior ministers already have concerns about the possibility of a mansion tax on properties worth £2 million or more, while some have criticized “anti-ambition” taxes such as VAT on private school fees.
But significant cuts are understood to be ruled out because Downing Street and Number 11 do not think they can overcome Labor backbenchers following the pre-summer welfare revolt.
But leading pollsters have warned that the government could face a point of no return for voters if it breaches its manifesto commitment.
Sir John Curtice said: “I think there is clearly a risk that, like the Liberal Democrats’ tuition fees in 2010, this will be seen as a very important part of their selling proposition.”
He also noted: “Labour is hoping to put the blame on the Conservative Party and Brexit. The difficulty now of course is that you could have said that 16 months ago.”
But he warned that “there is a risk to its credibility” in terms of the recovery in the polls.
Prominent pollster Lord Robert Hayward conceded the move would not have a major impact in the short term, but pointed out that the Techne poll found less than one in five voters (19 per cent) now had confidence in the Starmer government.
He said: “When it comes to reasons for not voting Labour, I think this will be high on voters’ list of ‘and something else’ issues at the next election.”
He suggested the level would make little difference if Ms. Reeves were to get a raise. “The impact will be the same for 2p as it is for 1p,” he added.
Former YouGov chairman Peter Kellner said: “The Chancellor missed two opportunities to minimize the election damage of breaching his tax commitments: immediately after the election, using the Tory black hole argument, or this spring, when Trump upended world trade rules and raised tariffs.
“It’s a lot harder now. If he can sell the whole package as economically smart and socially progressive, he can get away with it. At best, he has a 50-50 chance of making it.”
