Reeves must raise income tax by 2p, says think tank

Rachel Reeves has been urged by a leading think tank to raise income tax while cutting national insurance in November's Budget, a move that would hit landlords and pensioners hardest.

- KATE DEVLIN WHITEHALL EDITOR

The Resolution Foundation says the chancellor could raise £6bn with a 2p cut in national insurance, matched by a 2p rise in income tax, which would create a “level playing field” and protect workers’ pay.

The call comes days after experts warned tax rises were “inevitable” in the wake of new figures which showed government borrowing had soared, the latest in a long list of blows for the chancellor.

Ms Reeves is facing increasing pressure to rescue the UK’s troubled finances in the Budget, amid warnings she must cut public spending or raise levies to plug an economic black hole left by Labour U-turns, higher borrowing and sluggish economic growth.

The think tank says the changes would help tackle “unfairness” in the tax system, as income tax is paid by more people, including pensioners and landlords.