Reeves urged to axe manifesto pledges to avert repeat of 'pasty tax' fiasco

Rachel Reeves has been urged by colleagues to ditch the party's manifesto promises, rather than risk a “pasty tax” budget that raises money through a slew of small measures.

- Heather Stewart Richard Partington

As the independent Office for Budget Responsibility (OBR) presented its first fiscal forecast to the Treasury yesterday, several sources said there was tension within the government over the manifesto pledges. Labour’s manifesto before returning to power last year included a promise not to raise national insurance, VAT or income tax, which between them account for about 75% of tax revenue.

One person with knowledge of the pre-budget debate in Downing Street said: “There’s a political risk that No 10 are increasingly worried about, that we’re dying a slow death by, the manifesto pledges and the budget will look like a hodgepodge.”

Reeves remains firmly committed to the manifesto promises, however, according to colleagues - and is not asking officials to cost how much specific tax raising measures that would involve breaching them may raise.

Having carried out a stocktake of its productivity forecasts over the summer, the OBR is understood to have presented Reeves with a significantly more pessimistic preliminary growth forecast last month.