Rachel Reeves all but admitted yesterday that in her Budget this month she will break Labour’s election manifesto promise not to raise income tax, National Insurance or VAT.
The Chancellor used an interview to claim that while it would be ‘possible’ for her to stick with the commitments, it would require ‘things like deep cuts in capital spending’.
But in a mounting revolt, senior Labour MPs have warned that breaching the pledge would be her ‘Nick Clegg moment’ – akin to the ex-Lib Dem leader’s broken promise, made before joining the coalition government with the Tories in 2010, not to increase tuition fees.
Ms Reeves also heavily hinted she would scrap the two-child benefit cap, saying there were ‘costs to our economy in allowing child poverty to go unchecked’.
The cap restricts child benefits and universal credit to the first two children in most households.
But she was accused of making ‘all the wrong choices’ by the Tories, who said she would not need to raise taxes if she curbed Government spending.
Ms Reeves told BBC Radio 5 Live that sticking with the commitments ‘would require things like deep cuts in capital spending, and the reason why our productivity and our growth has been so poor these last few years is because governments have always taken the easy option to cut investment’.
Rachel Reeves all but admitted yesterday that in her Budget this month she will break Labour ’s election manifesto promise not to raise income tax, National Insurance or VAT. She is pictured running in Hyde Park yesterday morning
Ex-Lib Dem leader Nick Clegg is pictured making his famous apology speech after breaking a promise, made before joining the coalition government with the Tories in 2010, not to increase tuition fees
She added: ‘As a result we’ve never managed to get productivity back to where it was before the financial crisis. So we’ve always got choices to make, and what I promised during the election campaign was to bring stability back to our economy.’
She insisted ‘final decisions’ had not yet been taken, but said she would do ‘what I believe is right for our country – and sometimes that means not always making the easy decisions’.
Asked how Ministers would justify raising taxes for some people while increasing benefits for others, Ms Reeves said it was important not to let the ‘costs to our economy in allowing child poverty to go unchecked’.
She added: ‘I don’t think that it’s right that a child is penalised because they are in a bigger family. So we will take action on child poverty. The last Labour government proudly reduced child poverty, and we will reduce child poverty as well.’
Former PM Gordon Brown is among those urging the Chancellor to scrap the cap. He yesterday said he was ‘confident’ it would be addressed.
But backbenchers have also been warning Ms Reeves against breaking manifesto pledges, with Hornsey and Friern Barnet MP Catherine West saying it could be as catastrophic for Labour as the tuition fees backtrack was for the Lib Dems in the 2015 election, which was how she won her seat.
‘If I were Rachel, I would not be breaking the manifesto promise,’ she told BBC Radio 4, adding such moves ‘come back to haunt you’. And Labour deputy leader Lucy Powell said the move would damage ‘trust in politics’.
Shadow Chancellor Sir Mel Stride said: ‘Every time the numbers don’t add up, Reeves blames someone else. But this is about choices – and the Chancellor is making all the wrong choices.’
