Income tax rises axed as Reeves caves in to MPs

RACHEL Reeves has bottled it. With less than two weeks to go before her Budget, she's scrapped plans to increase income tax because of fears about how voters, and her own Labour colleagues, would react. But her new plan may be even worse.

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Because she's now looking at freezing or reducing income tax thresholds - meaning people on low incomes, including pensioners and hardworking employees on the minimum wage, are hit hard.

She's also likely to ensure more working people on reasonable wages find themselves paying the higher 40% tax rate, which was once designed only to affect the rich.

There was a time when the contents of a Budget were kept carefully under wraps until they were announced in Parliament. This time, however, Ms Reeves made sure the whole world knew in advance that she planned to break a manifesto pledge not to increase rates of income tax, VAT or National Insurance.

For example, she told the BBC: "It would, of course, be possible to stick with the manifesto commitments, but that would require things like deep cuts in capital spending." Given that she also said she didn't want to cut capital spending, because that would reduce economic growth, the message was clear.

Some Labour colleagues were worried. The party's Deputy Leader, Lucy Powell, said breaking manifesto promises would damage trust in politics.

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