THE Chancellor has been warned that “promises matter” as she prepares to break Labour’s manifesto by raising income tax.
Culture Secretary Lisa Nandy said the election pledges should be taken “very, very seriously” by Rachel Reeves.
But Ms Reeves is expected to use her November 26 Budget to raise the headline rates of income tax for the first time in 50 years.
A 2p hike would most likely be offset by a 2p reduction in National Insurance so she can try to claim her vow to protect “working people” still stands.
But Ms Reeves still risks being accused of breaking Labour’s flagship promise not to raise income tax, National Insurance or VAT just 17 months on from the election.
Deputy Labour leader Lucy Powell last week demanded ministers stick by their promises.
Ms Nandy told Sky News yesterday: “I agree with Lucy that promises matter. I also agree with her that the situation this Government inherited is very challenging.
“We’ve got to make fair choices, and as she said in answer to a question about this, she will always support the Chancellor to make the right decisions in the interest of the country.”
The Office for Budget Responsibility is expected to update Ms Reeves today on how close her sums are to filling a £30billion black hole.
Meanwhile, hundreds of thousands of bosses are considering moving their businesses abroad due to crippling tax rates.
A survey by Rathbones wealth managers found one in eight small to medium-sized firms are threatening to leave if Ms Reeves clobbers them at the Budget.
