Chancellor Rachel Reeves ‘considers Budget income tax hike' - as minister gives response

Labour promised at last year's General Election the party would 'not increase taxes on working people' - including income tax, national insurance, and VAT - in government

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Labour's election vow not to raise income tax still stands, a top minister has been forced to insist.

It comes in response to reports Rachel Reeves is considering a plan to hike income tax at the Budget in a move that would be a major breach of the party's manifesto.

Labour promised at last year's General Election the party would "not increase taxes on working people" - including income tax - in government. But the Chancellor is facing a make-or-break Budget next month and the challenge of plugging a £20billion-£30billion blackhole in order to stick to her spending rules.

Among options reportedly being examined to plug the blackhole, the Treasury is said to be looking at adding 1p to the basic rate of income tax - bringing in around £8billion.

The Guardian suggested another option for the November 26 Budget could be a hike to the higher rates of income tax. Under existing rules, a 40% income tax rate kicks in for those earning above £50,271 and 45% for those earning over £125,140.

Ms Reeves has previously suggested higher taxes on the wealthy will be "part of the story" when she delivers the Budget while those with "broadest shoulders shoulders should pay their fair share of tax".

A Treasury spokesman told The Mirror: “We do not comment on speculation around changes to tax.”

Quizzed on the reports to raise income tax on BBC Breakfast, the Labour minister Nick Thomas-Symonds said on Friday: "We stand by our manifesto pledges that we made on income tax, national insurance, and VAT."

Asked whether he did not believe Rachel Reeves would be raising income tax at the Budget, he replied: "There's going to be speculation every single week about what is or isn't in the Budget now.

"Only Rachel Reeves herself is going to ultimately make these decisions ultimately. What I can tell you today is we stand by our manifesto commitments. In Rachel's first Budget she protected people's payslips."

Asked about income tax earlier this month, Ms Reeves said: "I stand by the commitments that we made in the manifesto and for a reason. Because working people experienced in the last Parliament the worst-ever living standards in any Parliament.

"But worse than that, living standards were actually lower at the end of the last Parliament than they were at the beginning."

Earlier this week the Chancellor also insisted Brexit and Tory austerity have had an even bigger impact on the UK's economy than first feared. She hinted the Office for Budget Responsibility (OBR) would be "pretty frank" about the issues ahead of next month's Budget.

The economic watchdog has previously suggested the Brexit deal would reduce productivity by 4% - compared to remaining in the EU. It will publish its latest economic forecasts alongside the Budget on November 26.