Labour tax pledge stands, says No 10, as Reeves rolls pitch for hikes on wealthy

Labour’s manifesto pledge not to raise taxes on working people still stands, Downing Street said, after the Chancellor suggested she would target the wealthy as part of her Budget next month.

Rachel Reeves has acknowledged she is looking at potential tax rises and spending cuts at her November 26 statement.

With no boom in economic growth, stubbornly high inflation and the mounting costs of government debt, she will have to fill a black hole estimated at around £50 billion by some economists.

No 10 said Sir Keir Starmer’s position that the “manifesto stands” on the party’s pledges not to raise VAT, income tax or national insurance has not changed.

The Prime Minister’s official spokesman referred to the Chancellor’s recent interviews, in which she has acknowledged asking the wealthier to pay more in last year’s budget.

“And when asked, ‘should we expect to see more of that’, she said that will be part of the story in the Budget, but we’ll be focusing on things that don’t impact on growth, because we need to unlock that economic growth for our economy,” he said.

The Chancellor said those with the “broadest shoulders” should pay their share in another nod to her plans on Thursday.

“I do think that those with the broadest shoulders should pay their fair share of tax. I think you can see that through my actions last year at the Budget,” she told The Sun.

She told Sky News before departing for Washington for the International Monetary Fund (IMF) meeting that “of course, we’re looking at tax and spending”.

Asked if she was now in a “doom loop” of having to constantly hike taxes to fill a black hole, Ms Reeves said she would not use those words but “nobody wants that cycle to end more than I do”.

And she told The Guardian that higher taxes on the wealthy would be “part of the story” in her Budget.

Ms Reeves will need to find a way to meet her goal of balancing day-to-day spending with tax revenues while maintaining “headroom” of around £10 billion.

The Institute for Fiscal Studies (IFS) said it expected the Chancellor would need to find at least £22 billion next month, thanks to rising borrowing costs, weaker growth forecasts and spending commitments made since the spring.

That figure would restore the £10 billion of headroom Ms Reeves previously left herself against her self-imposed debt rules, although it does not include the cost of widely expected announcements on abolishing the two-child benefit cap and maintaining the freeze on fuel duty.

But the IFS said there was a “strong case” for the Chancellor to go further, arguing that a £10 billion buffer was not enough to ensure stability and would leave her “limping from one forecast to the next”.

Meanwhile, the National Institute of Economic and Social Research (Niesr) has suggested Ms Reeves will need to find around £50 billion a year by 2029-39.