Powell in challenge to Reeves over tax plans

Labour should stand by its manifesto commitment not to raise income tax, national insurance or VAT, the party's deputy leader, Lucy Powell, has said, in a challenge that will put pressure on Rachel Reeves.

- Rowena Mason Jessica Elgot

With the Treasury examining whether to raise income tax to plug a £30bn fiscal hole, Powell declared it was “really important we stand by the promises we were elected on and do what we said we would do”.

She said: “Trust in politics is a key part of that because if we're to take the country with us then 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.”

Powell made the significant intervention on BBC Radio 5 Live, calling at the same time for the two-child benefit cap to be lifted in full rather than softened.

She said she wanted a “budget of fairness”, with more money, not less, being put into people’s pockets, and one with a “strong Labour story about how we are rewiring the country in the interests of the many not just the few”.

Her remarks are likely to be uncomfortable for Reeves and Keir Starmer as both have in recent weeks declined to repeat their commitments to stand by the manifesto pledge on tax.

The government has been looking at the possibility of raising income tax as a way of giving a substantial boost to the public finances and leave an extra buffer for potential financial shocks.