Labour must stick to manifesto pledge not to raise key taxes, Lucy Powell says

Labour’s new deputy leader Lucy Powell has said the Government should not rip up its manifesto promises over tax hikes, amid mounting speculation it is preparing to do so at the Budget.

Ms Powell, who was sacked from Sir Keir Starmer’s Cabinet in September before winning the deputy leadership election last month, said “we should be following through on our manifesto, of course”.

She suggested breaking the pledge not to raise income tax, national insurance or VAT would damage “trust in politics”.

Speaking to BBC Radio 5 Live, the former Commons leader said: “We should be following through on our manifesto, of course. There’s no question about that.”

She continued: “Trust in politics is a key part of that because if we’re to take the country with us then they’ve got to trust us and that’s really important too.”

Ms Powell said the highly anticipated Budget should be about “putting more money back into the pockets of ordinary working people”.

She said: “That’s what that manifesto commitment is all about. And that’s what this Budget will be about I’m sure.”

She added: “It’s really important we stand by the promises that we were elected on and that we do what we said we would do.”

The Manchester Central MP also called for the two-child benefit cap to be lifted “in full” as a matter of urgency.

The Government has come under increasing pressure to scrap the policy, which restricts child tax credit and universal credit to the first two children in most households.

Ms Reeves is expected to make changes to the limit, first announced in 2015 by the Conservatives, in her autumn statement.

It has been reported the Treasury is looking at different options including whether additional benefits might be limited to three or four children, or whether there could be a taper rate meaning parents would receive the most benefits for their first child and less for subsequent children.

Ms Powell said: “I think what we’ve all been talking about recently is the urgency of that now, because every year that passes with this policy in place, another 40,000 minimum, 40,000 children, are pushed into deep levels of poverty as a result of it and that’s why it is urgent that we do lift it and we lift it in full.”

Her comments could cause a headache for the Prime Minister and Chancellor Rachel Reeves, who have recently heightened expectations that the November 26 Budget will feature an increase in the basic rate of income tax.

Doing so would mean ditching Labour’s commitment to voters ahead of last year’s general election not to increase income tax, national insurance or VAT.

Ms Reeves could use a 2p rise in income tax to help plug what the National Institute of Economic and Social Research said is a £50 billion black hole in the nation’s public finances and give herself a larger fiscal headroom.

Ms Powell won the deputy leadership race after a campaign based on a call for the party to change course.

Her intervention will be seen as evidence that she will use her position to speak out against Sir Keir’s administration’s policies, which she is free to do from the back benches, unlike her defeated deputy leadership rival, Education Secretary Bridget Phillipson, who is bound by collective responsibility.