Reeves must 'revisit' pledge not to raise taxes, says IMF

Chancellor faces tough choice between ditching triple lock, charging for healthcare, and breaking manifesto commitment

- DAVID MADDOX POLITICAL EDITOR

Rachel Reeves has been given her strongest warning yet that she will have to break a key party manifesto pledge by hiking taxes, introduce charges to use the NHS, or drop the triple lock guarantee on the state pension.

The beleaguered chancellor raised taxes by £40bn in her first Budget last year, partly to fund record new investment in the NHS. But now the world’s most important financial watchdog has warned that she is likely to have to break an election promise not to raise “taxes on working people” - income tax, VAT or national insurance contributions made by employees - in order to balance the books.

The IMF's intervention comes as the business secretary, Jonathan Reynolds, described demands from senior figures in Labour for the introduction of wealth taxes to close the financial gap as “daft”.

In a report on the UK economy, titled “Article IV Consultation with United Kingdom”, the International Monetary Fund (IMF) warned: “Unless the authorities revisit their commitment not to increase taxes on ‘working people’, further spending prioritisation will be required to align better the scope of public services with available resources.”

It went on: “The triple lock [a guarantee that applies to the state pension] could be replaced with a policy of indexing the state pension to the cost of living. Access to public services could also depend more on an individual’s capacity to pay, with charges levied on higher-income users, such as co-payments for health services, while shielding the vulnerable. There may also be scope to expand means testing of benefits.”

The challenges Ms Reeves is facing, the IMF said, include the impact of Donald Trump’s continuing tariff war, as well as the presence of “little fiscal headroom” in the UK finances.