Labour Urged to Honour Tax Pledges Ahead of Budget

Published: 07 November 2025. The English Chronicle Desk. The English Chronicle Online.

Labour’s deputy leader, Lucy Powell, has called on the party to uphold its manifesto commitment not to raise income tax, national insurance, or VAT, directly challenging the Treasury and putting pressure on Chancellor Rachel Reeves ahead of the next budget. Powell’s intervention comes amid intense speculation that the government may consider tax increases to bridge a £30 billion fiscal gap, highlighting divisions within Labour over balancing fiscal responsibility and public trust.

Speaking on BBC Radio 5 Live, Powell said it was “really important we stand by the promises we were elected on and do what we said we would do,” stressing the centrality of trust in politics. “If we’re to take the country with us, they’ve got to trust us, and that’s really important too. We should be following through on our manifesto, of course. There’s no question about that.”

Her comments underline an emerging tension within Labour, where the chancellor has been weighing options including a potential rise in income tax to boost public finances and prepare for unforeseen economic shocks. Powell also argued that the government should go further on welfare, calling for the two-child benefit cap to be lifted entirely rather than partially softened.

“This is about a budget of fairness,” she said, “with more money in people’s pockets, not less, and one with a strong Labour story about how we are rewiring the country in the interests of the many, not just the few.” Powell’s remarks are likely to cause discomfort for Reeves and party leader Keir Starmer, who in recent weeks have avoided explicitly repeating the commitment not to raise taxes.

A spokesperson for Powell later clarified that while she advocated upholding the manifesto, she would support any decisions made by Reeves and Starmer in the final budget. “As Lucy made clear in the interview, the chancellor and prime minister make decisions on the budget in the round. The context for this budget is particularly difficult, and Lucy will continue to support them on these issues,” the spokesperson said.

Meanwhile, Downing Street had no comment on Powell’s intervention. Reeves, in a speech earlier this week, had suggested that tax rises may be necessary to support public services, including the NHS, schools, and national security. “It is important that everyone – the public and politicians – understands that reality,” she said. “The less we spend on debt interest, the more we can spend on the priorities of working people … on public services essential to a decent society and a strong economy.”

Despite these statements, it remains uncertain whether Reeves will opt to raise income tax, which could generate around £7 billion, or pursue a combination of smaller tax measures. Final economic forecasts have not yet been presented to the chancellor, leaving the decision pending.

Powell’s intervention signals her willingness to challenge prevailing thinking in Downing Street. Elected deputy leader last month, she campaigned on a platform of speaking frankly and not sugar-coating her views, placing her in a unique position to question Starmer and Reeves. She previously served as leader of the House of Commons but was removed from that role during the summer reshuffle. Unlike cabinet ministers, she is not bound by collective responsibility, allowing her more freedom to publicly express dissenting opinions.

Her position reflects broader concerns among Labour MPs about the potential electoral consequences of breaking a manifesto pledge. Several backbenchers privately worry that reversing promises on taxation could erode public trust and damage the party’s credibility. “The two major reasons people are leaving us is they perceive we broke our promises and secondly because of the cost of living. This entrenches that,” one Labour MP told The English Chronicle Online.

Other MPs noted the delicate balancing act faced by the government. “Emotionally, colleagues don’t feel the same way about this as with welfare. But before Rishi [Sunak] raised national insurance in 2021, it ‘polled’ well. Not when it hit the ground. But it’s hard to go to the chancellor and say don’t do X when everything has to add up.”

Powell also reiterated the urgency of fully lifting the two-child benefit cap, citing its role in perpetuating child poverty. “Every year that passes with this policy in place, another 40,000 children are pushed into deep levels of poverty as a result of it. That’s why it is urgent we lift it in full,” she said.

Reeves is reportedly considering a partial lifting of the cap rather than scrapping it entirely. Early indications suggested that smaller measures could soften the impact, but Powell and other MPs argue that only a full removal would address the “grotesque levels” of child poverty exacerbated by the cap.

The issue of tax rises is particularly sensitive given the government’s need to fund public services while maintaining voter confidence. According to insider reports, the Office for Budget Responsibility’s downgrade in productivity forecasts created an urgent need to consider revenue-raising measures. Nevertheless, some officials believe that improving employment figures and falling debt financing costs may ease fiscal pressures, potentially allowing the government to avoid breaking its manifesto pledge on tax.

Cabinet ministers appear to be leaning towards raising income tax as a more straightforward approach than implementing numerous smaller tax measures, which could complicate the budget and its reception. However, there remains concern among some backbenchers that reversing a clear manifesto commitment could have serious political repercussions, particularly in marginal constituencies where voter trust is crucial.

Powell’s comments highlight the tension between economic pragmatism and political credibility. On one hand, the government must address the fiscal shortfall to maintain public services and economic stability. On the other, breaking a high-profile election promise risks alienating supporters and undermining Labour’s narrative of trustworthiness.

In the wider context, Labour’s debate over taxation intersects with discussions on social welfare priorities, public trust, and the party’s broader strategy for governance. Powell’s insistence on adhering to the manifesto reflects a growing desire among some MPs to maintain consistency and transparency, while others advocate flexibility to respond to changing economic circumstances.

As the budget approaches, the spotlight will remain on Reeves and Starmer, whose decisions on tax and welfare policy are likely to define the early trajectory of their government. Powell’s vocal stance adds an extra layer of scrutiny and raises questions about how internal party debates will influence policy outcomes in the coming weeks.