Reeves 'discussing an increase to income tax' in November budget

Rachel Reeves is considering raising income tax to help eliminate a multi-billion-pound black hole, sources have told the Guardian.

- Kiran Stacey Jessica Elgot Heather Stewart

The chancellor is in active discussions over breaking one of her party's main manifesto pledges in next month's budget as she looks for ways to clear an estimated shortfall of more than £30bn, according to three sources close to the process.

Some advisers in the Treasury and No 10 believe that putting up income tax now may be the only way to make sure she raises enough money to avoid further tax increases again in this parliament. But Reeves is understood to be nervous about the political consequences of such a major abandonment of the party's previous pledges, especially given she broke them to raise employers' national insurance last year.

The Treasury is also torn over which rates it could raise. One source said Reeves was considering adding 1p to the basic rate, which would bring in more than £8bn. However, doing so is likely to add to concerns about the cost of living.

And with the chancellor having promised to make sure those with the “broadest shoulders” face the highest burden, others believe she is more likely to raise the higher or additional rates.

Those rates, which kick in at earnings of roughly £50,000 and £125,000 a year, bring in the much smaller sums of about £2bn and £230m, respectively.

One senior official said current discussions centred on how much room Reeves wanted to give herself against her fiscal rules. The chancellor has said she wants to have more than the £10bn she accounted for at the spring statement, which has since been eroded by changing economic forecasts, but has not yet decided how much.