Starmer Faces Pressure as Tax Promises Come Under Question

Published: 29th July 2025 | The English Chronicle Online

Prime Minister Sir Keir Starmer has refused to give a clear assurance that his government will stick to its key tax promises, raising speculation that Labour could break its election commitments in the upcoming Budget.

During Prime Minister’s Questions, Sir Keir avoided repeating the specific pledge not to raise income tax rates, Value Added Tax (VAT), or National Insurance. Conservative leader Kemi Badenoch immediately seized on his silence, arguing that this was a clear sign that tax rises were being prepared behind the scenes. She accused the Labour government of being “too weak” to control public spending, forcing it to raise taxes instead.

The issue comes at a sensitive time for the government, as Chancellor Rachel Reeves prepares for the 26 November Budget. After a series of difficult economic forecasts and recent reversals on welfare cuts, the chancellor is believed to be facing a large financial shortfall. Many in Westminster now believe she will have little choice but to raise taxes to balance the books.

Just a few months ago, Sir Keir had firmly stated that his party would honour all of its tax commitments. When pressed by Badenoch in July, he had answered “yes” without hesitation, confirming that the manifesto promises still stood. Ministers also repeated in late July that “the manifesto stands today.” However, when asked the same question again this week, Sir Keir avoided a direct answer, saying only that the government would “lay out our plans” during the Budget next month.

Badenoch mocked the prime minister for his apparent change of stance, pointing out that he had once given his earlier assurance with a “smug grin.” She asked pointedly, “What’s changed in the past four months?”

Following the exchange, Downing Street’s spokeswoman also declined to repeat the no-tax-rise pledge, insisting she could not “pre-empt” the Budget.

Labour’s 2024 election manifesto had pledged not to raise the basic, higher or additional rates of income tax, or National Insurance. It also promised not to increase VAT, although the exact scope of that promise—such as whether it applied to VAT thresholds or which goods are covered—was never fully clarified.

However, these commitments have left Chancellor Reeves with very limited options for raising revenue. Analysts say the ban on increasing these three major taxes severely restricts her ability to generate the funds needed to meet her fiscal rules. One option still available to her is to extend the freeze on income tax thresholds, which was originally due to end in 2028. If that freeze continues, rising wages will push more people into higher tax bands, effectively increasing the government’s income without formally changing tax rates.

Some senior Labour members have reportedly advised Reeves to consider modest income tax increases now, early in the parliamentary term. They argue that it is politically safer to act before the next election and that a broader tax rise would raise substantial revenue without singling out any one group. Others within the party, however, are deeply concerned. They fear that such a move would represent a serious breach of faith with voters and could weaken confidence in the government’s integrity. There are also worries that higher taxes could further slow economic growth at a time when Britain’s recovery remains fragile.

This latest controversy follows earlier tax rises introduced by Reeves during her first Budget last November, when she raised employer National Insurance contributions, bringing in around £40 billion a year. At that time, she promised not to repeat the measure, but recent developments suggest that the government may again be preparing for difficult fiscal decisions.

The situation has been made more complicated by reports that the Office for Budget Responsibility (OBR) will downgrade its forecasts for productivity in the UK economy. This would leave the government facing an additional £20 billion gap in its plans to meet its tax and spending rules.

During this week’s heated parliamentary exchanges, Sir Keir sought to shift blame to the previous Conservative governments, accusing them of inflicting lasting harm on the economy through austerity, Brexit, and the disastrous mini-Budget introduced by former Prime Minister Liz Truss in 2022. He said the OBR’s new forecast revealed “the true extent of the damage” done by years of Conservative mismanagement.

Badenoch rejected this explanation, claiming that Labour was attempting to hide its own failures behind old excuses. She accused Starmer of being more willing to “dip into people’s pockets” than confront his own MPs by cutting welfare spending. “He’s blaming us, he’s blaming the OBR, and last week he was blaming Brexit,” she said. “Isn’t the truth that with this prime minister, it’s always someone else’s fault?”

With just weeks to go before the November Budget, the government is now under growing pressure to clarify its plans. The coming month will test whether Labour intends to honour the promises it made to voters—or whether the reality of the UK’s economic challenges will force Sir Keir and Rachel Reeves to make difficult and politically costly choices.

Report by The English Chronicle Desk