Manifesto promise under strain
Sir Keir Starmer has refused to stand by Labour’s election pledge not to raise income tax, employee national insurance, or VAT, warning that worsening economic forecasts have deepened the challenge facing next month’s Budget.
Speaking in the Commons at PMQs, the prime minister stopped short of repeating his long-standing assurance that “the manifesto stands.”
His spokesperson also declined to confirm the commitment, fuelling speculation that Labour could break its central fiscal promise less than a year into government.
The shift follows new projections from the Office for Budget Responsibility (OBR), showing a sharp downgrade in productivity growth that could wipe £20 billion from the public finances. Economists say the total fiscal hole could reach £30 billion or more.
“The forecasts confirm the Tories did even more damage to the economy than we previously thought,” Starmer told MPs, blaming austerity, Brexit, and Liz Truss’s “mini-Budget” for long-term economic scarring.
Budget dilemma for Labour
Chancellor Rachel Reeves is under mounting pressure to balance the books ahead of her November 26 Budget. While aides insist no final decision has been made, officials admit an income tax rise is being “seriously considered” if the OBR’s final data show limited fiscal headroom.
One Labour source said Reeves was preparing “twin-track” Budget options, one that holds to the manifesto, and another that includes tax increases if growth or borrowing forecasts deteriorate further.
Starmer hinted at optimism in the wider economy, noting that retail sales, inflation, and stock market performance were all stronger than expected. But allies say Labour’s room to manoeuvre is minimal: “The productivity numbers are really bad,” one said. “What are we supposed to do, change the fiscal rules? The markets would go mad.”
Opposition attacks intensify
Conservative leader Kemi Badenoch accused Starmer of “preparing to betray voters,” warning that Labour “can’t cut spending, so it will raise taxes instead.” She challenged him to sack Reeves if taxes rise, declaring: “If Rachel Reeves breaks her promise and puts up tax, she must get the axe.”
Labour’s last major tax commitment, a freeze on income tax thresholds, already raises nearly £10 billion annually. Analysts say that even a 1p rise in the basic rate would yield £8 billion more by 2028.
With the Budget now less than a month away, Starmer’s reluctance to restate his pledge suggests the government is bracing the public for tough choices, and a defining test of its credibility.
