A Cabinet minister denied Labour had “misled” voters with its manifesto as Rachel Reeves was set to launch a multi-billion-pound tax raid.
Pat McFadden, one of Sir Keir Starmer’s closest aides, rejected accusations that the new Labour government was going to break manifesto promises amid reports that it is due to increase National Insurance on employers and freeze the thresholds for paying income tax for another two years.
These two measures are widely expected to be in the Budget on Wednesday.
Labour’s manifesto states: “We will ensure taxes on working people are kept as low as possible.
“Labour will not increase taxes on working people, which is why we will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT.”
The Tories and the Institute for Fiscal Studies say increasing NI on employers would breach the Labour manifesto.
Bit Sir Keir, who was delivering a keynote speech on Monday on Britain’s economic situation, and the Chancellor argue that the tax pledge was caveating to apply to “working people”, and not cover companies.
“We won’t go back on our promises,” Cabinet Office minister Mr McFadden told ITV’s Good Morning Britain.
He argued that Ms Reeves would deliver “the most honest Budget that the country has had for a long time”.
Pressed whether the Government had not been upfront with people ahead of the July 4 general election about tax rises, he said: “I don’t think we misled people.”
He highlighted that during the election campaign the Tories had stressed that Labour had not ruled out an NI increase on employers
But former Labour Cabinet minister Ed Balls, who was Gordon Brown’s righthand man in the Treasury and is now a GMB presenter, then quizzed Mr McFadden on the expected freeze on the thresholds for paying income tax.
Ministers have said that “working people” would not see any changes in their “pay slips” from tax rises in the Budget on VAT, National Insurance and income tax.
However, Mr Balls said: “If personal allowances were frozen for more years that absolutely would categorially be seen on somebody’s pay slip.”
He urged Mr McFadden to confirm that he was effectively ruling this out by the “pay slip” pledge any extension of the freeze on income tax thresholds.
However, the minister said: “Let’s see what the Chancellor says....you won’t expect me to say anything more about Budget measures today.”
The Chancellor is expected to seek a £40 billion package of tax rises, many of which could hit London hard, and Whitehall spending cuts.
She argues this is needed to plug an alleged £22 billion black hole in the public finances which she says the Tories left, which they deny, and also to plough billions more into the Government’s priorities including improving the NHS.
Ms Reeves is also set to ease her debt fiscal rule so she can borrow around £20 billion more to invest in transport and other infrastructure projects, but this has sparked warnings that the extra borrowing could push up interest rates and mortgage bills.
Mr McFadden said that the public should “look for three things” when they hear Ms Reeves’ Budget on Wednesday.
Speaking to Times Radio, Pat McFadden, the Chancellor of the Duchy of Lancaster, listed those three things as “first, that it will stabilise the public finances and do so in a way that’s consistent with our manifesto”, secondly “that it will start to turn around things in the public services” particularly the NHS, and thirdly “to change the investment story for the country’s future”.
However, shadow science secretary Andrew Griffith said Labour “essentially lies to the British people” in terms of its plans, and he compared the party’s behaviour to the “worst form of dodgy car hire firm”.
