Prime Minister Keir Starmer and Chancellor Rachel Reeves have abandoned plans to raise UK income tax rates, according to the Financial Times, marking a significant shift just weeks before the 26 November budget.
Earlier headlines on this are here:
UK PM Starmer and fin min Reeves drop plan to hike income tax rates
Reuters expand:
Officials cited by the paper say the move reflects concerns about voter backlash and rising tensions within Labour’s own ranks.
Reeves had been expected to raise tens of billions of pounds through higher income taxes to meet tight fiscal rules — a priority for gilt investors — but the government is now exploring alternative revenue options to plug a fiscal gap estimated at up to £30 billion. The FT reports the decision to reverse course was communicated to the Office for Budget Responsibility on Wednesday.
Neither the Treasury nor the OBR commented when contacted by Reuters, and the report remains unverified.
Starmer and Reeves had previously promised not to raise taxes on “working people,” but late last month Starmer suggested the state of the public finances was worse than anticipated, prompting speculation that previous pledges might need to be revisited. Instead of rate hikes, Reeves may now consider adjusting tax thresholds to generate revenue.
The National Institute of Economic and Social Research has urged the government to identify around £50 billion in measures to stabilise the fiscal outlook.
This article was written by Eamonn Sheridan at investinglive.com.