Rachel Reeves, the Chancellor of the Exchequer, is reportedly set to abandon plans to increase income tax rates during the upcoming Budget scheduled for November 26, 2023. This decision comes amid concerns that such a move would violate a pledge made in the Labour Party’s election manifesto and risk alienating voters and party members.
According to the Financial Times, both Reeves and Prime Minister Keir Starmer have reconsidered the proposed tax hike. The anticipated policy shift reflects the government’s sensitivity to public sentiment and internal pressures from Labour MPs.
In a discussion on BBC Breakfast, Lisa Nandy, the Culture Secretary, emphasized that “no decisions were made or set in stone” prior to the Budget’s presentation in the House of Commons. This suggests that while discussions are ongoing, final decisions are yet to be confirmed.
The Treasury has not responded to inquiries regarding the matter, leaving the public and analysts awaiting further clarification.
Reeves had previously refrained from explicitly confirming any tax increases but did not dismiss the possibility outright. Earlier this month, she delivered a pre-Budget speech highlighting the need for the government to make “necessary choices” and indicating that all individuals would need to “contribute” to the country’s financial health.
This potential reversal on tax policy could have significant implications for the Labour Party’s standing with the electorate, particularly as it balances fiscal responsibility with the need to maintain voter support. The upcoming Budget presentation will be a critical moment for the government, as it seeks to outline its economic strategy while navigating public expectations and party dynamics.
