The government hinting at a rise in income tax at the budget only to not go through with it in a bid to win over voters would be “deplorable”, according to Labour peer Harriet Harman.
Reports are swirling that the chancellor is considering a manifesto-breaking hike when she delivers her crucial fiscal statement next month – and Sir Keir Starmer failed to rule it out at PMQs this week.
The Daily Telegraph says Rachel Reeves is considering a proposal by the Resolution Foundation think tank to cut national insurance by 2p and add it to income tax – protecting workers while hitting pensioners and landlords.
But Baroness Harman warned ministers against “manipulative” briefing to the media ahead of the budget, as the constant speculation “will only make people anxious”.
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She told Sky’s political editor Beth Rigby on the Electoral Dysfunction podcast that it would be the “worst sort of briefing and political games playing”.
“I hope they’re not seeding the idea there’s going to be an increase in income tax announced at the budget so they can get credit for not announcing it, because I just think that’s manipulative of public opinion,” she said.
Baroness Harman added: “If they’re thinking about it, that’s one thing – but if they’re putting it out when they actually know they’re not going to do it, I just think that’s deplorable.”
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Baroness Harman said Ms Reeves has three options to deal with the gap in the public finances: cutting spending, increasing borrowing or raising tax revenue.
She said spending cuts are problematic as departments like health, education, transport, and councils need more investment – and will likely be voted down by Labour MPs.
Increasing borrowing would mean paying more interest, she said, and that would risk being seen as breaching a manifesto commitment on the chancellor’s fiscal rules.
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What tax rises could Reeves announce?
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Raising income tax, national insurance or VAT would also breach the manifesto, which Baroness Harman said would raise questions about everything Labour said had promised.
“What does it mean about what you meant at the time?” she said.
“Did you not mean it at the time? Were you just saying it to get people’s votes, or did you say it unwisely because you didn’t realise what your scope was going to be?
“Either is really bad.”
Ms Reeves will deliver the budget on 26 November.
