Labour’s Rachel Reeves rules out income tax rise or NI

The Labor Party has said there will be no increases in income tax or Social Security if it wins the general election – but some spending cuts have not been ruled out.

Shadow Chancellor Rachel Reeves told the BBC’s Laura Kuenssberg that she did not want to make any spending cuts.

But she had “no illusions about the scale of the challenge” and would face “difficult decisions,” she said.

The Conservatives have twice cut National Insurance and said they intend to scrap it when circumstances allow.

Treasury economic secretary Bim Afolami said Reeves’ comments showed this was “just the same old Labor Party that has no plans to cut taxes and is instead letting working families foot the bill for its unfunded spending commitments.”

The choice in the election was between “a clear and bold plan to cut taxes and end double taxation on labor, under Rishi Sunak, or go back to square one with the same old Labor Party, that as soon as they run out of resources the money will come behind yours”, he added.

Reeves said on Sunday with Laura Kuenssberg that Labor supported lower taxes, but she would not bring forward “unfunded proposals”.

Pressed repeatedly about her tax plans, she said: “What I want and Keir [Starmer] What we want is for taxes on workers to be lower and we certainly won’t increase income tax or social security if we win the election.

“We opposed national insurance increases when Rishi Sunak introduced them as chancellor.

“Unlike the Conservatives, who have already racked up £64 billion in unfunded tax cuts in just three days of this campaign, I will never act rashly and negligently with the public finances, I will never bring forward unfunded proposals.”

The Conservatives claim that Labour’s spending commitments would leave a £38.5 billion black hole in the public finances, equivalent, Afolami said, to a “£2,094 tax rise for every working family”. The Labor Party rejected the figures.

On Saturday, the independent think tank Institute of Fiscal Studies issued a stark warning about the challenges awaiting the next government, saying the state of public finances hung over the election campaign “like a dark cloud”.

He warned that more tax increases or cuts to public services could arise, regardless of who wins on July 4th.

Reeves promised there would be “no return to austerity”, saying commitments to increase frontline services were a “down payment for the changes we want to make”.

“This money for our NHS, the additional police – 13,000 additional police and community workers – and the 6,500 additional teachers in our schools, are all fully funded and fully funded promises because unless things are fully funded and fully funded, Frankly, you can’t believe they will happen.”

She said Labor would raise some of the money by ending the VAT exemption for private schools and extending the windfall profits tax to energy companies.

The party also said it will raise £5 billion a year by tackling tax evasion and evasion, and £2.6 billion by plugging “gaps” in the government’s plans to abolish non-domestic exemptions. Non-domestics are UK residents whose permanent residence for tax purposes is abroad, which means they do not have to pay UK tax on the money they earn abroad.

“But in the end, we have to grow the economy, we have to reverse this terrible economic performance,” added Reeves.

Later, during a campaign visit to Ossett, West Yorkshire, when asked whether she would rule out increases in other taxes, including VAT and capital gains tax, she said: “There is nothing in our plans that requires further tax rises. ”.

Although the shadow chancellor has promised a rapid injection of funds to increase the number of NHS appointments and teacher recruitment, other areas unprotected from public spending, such as council services and justice, could face cuts if Labor maintains its rule of not taking out loans. to finance day-to-day expenses.

Reeves ruled out setting a timetable for when a Labor government would increase defense spending to 2.5% of national income, saying there would be a review of defense costs which have “spinned out of control under this government”.

A spending review would take place if Labor won the election, the shadow chancellor said, and a “fiscal blockade” would be introduced, meaning any significant and permanent tax and spending changes would require a full forecast from the independent Office for Budget Responsibility (OBR).

The OBR normally needs 10 weeks’ notice to produce a forecast, and scrutiny of opposition parties’ plans is not permitted.

This means that there would need to be a delay between the general election result and any spending actions for the OBR to comprehensively incorporate and evaluate these policies if the Labor Party were to fulfill its commitment to a thorough process.

Liberal Democrat leader Sir Ed Davey said his party had “already committed not to raise taxes on ordinary people”.

“People are paying too much tax under the Conservatives – the Conservatives have raised taxes by a record amount,” he added.

Speaking in Cambridgeshire, Sir Ed also said the Liberal Democrats were “enthusiastic” about the campaign and could “beat the Conservatives where Labor can’t”.

The SNP accused Labor of trying to “mislead” voters about its spending plans.

Drew Hendry, the party’s economy spokesman, said Labor had a “devastating plan to slash funding for public services by billions of pounds”.

He added that there was a “conspiracy of silence between the Tories and the Labor Party over austerity cuts”.