Ditch pledge on tax rises, CBI chief tells Reeves

The boss of the Confederation of British Industry has suggested the chancellor should tear up Labour's manifesto pledge not to raise taxes on working people in a significant intervention before the November budget.

- Heather Stewart, Richard Partington

Rachel Reeves is widely expected to present a package of tax rises in the statement to offset deteriorating economic forecasts. However, the chancellor has been hamstrung by Labour's promise not to increase the three main revenue-raisers for the Treasury: income tax, national insurance and VAT.

But in a surprise move in the debate on how to raise extra revenue, the CBI boss, Rain Newton-Smith, says the "time for tinkering is over".

Writing in the Guardian, the head of the longstanding lobby group representing many of the UK's top firms warns the chancellor against "slavish adherence" to tax promises made in the run-up to last year's general election. She said the pre-election promises have now been overtaken by events.

"The fact is geopolitics and global markets have shifted. The world is different from when Labour drafted its manifesto, and when the facts change so should the solutions," she writes. "The chancellor cannot raid corporate coffers again so she must look elsewhere, embracing long-term strategic tax reforms rather than maintaining a slavish adherence to manifesto promises on tax or ideas based on the world as it was 18 months ago." The party's manifesto states: "Labour will not increase taxes on working people, which is why we will not increase national insurance, the basic, higher, or additional rates of income tax, or VAT." As well as suggesting Reeves revisit Labour's promises on personal taxation, Newton-Smith calls for the reform of business rates, VAT thresholds for small firms and stamp duty.