Rachel Reeves has appeared to admit she will put up workers’ taxes at this month’s Budget in a breach of Labour’s election manifesto pledge.
The Chancellor said it would “be possible to stick with the manifesto commitments, but that would require things like deep cuts in capital spending”.
Reeves went on to suggest she was against cutting investment in this way, arguing decisions to cut capital spending are “the reason why our productivity and our growth has been so poor”.
Her apparent admission comes despite Labour deputy leader Lucy Powell and other senior party figures voicing deep concerns about breaking the election manifesto pledge not to raise the rates of income tax, VAT or national insurance (NI).
Reeves is believed to be planning an increase in income tax, with one possible option a 2p hike in income tax offset by a 2p cut in NI, with those earning less than £50,000 spared from paying more.
The Chancellor told Matt Chorley on BBC Radio Five Live: ” “It would, of course, be possible to stick with the manifesto commitments, but that 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 in rail and road projects, in energy projects, in digital infrastructure, and as a result, we’ve never managed to get our productivity back to where it was before the financial crisis.
“So we’ve always got choices to make, and what what I promised during the election campaign was to bring stability back to our economy.
“What I can promise now is I will almost do what I think is right for our country, not the politically easy choice, but the thing that I think is necessary, or the things that I think are necessary to put our country on the right path.”
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