Sir Keir Starmer has declined to say whether he will stick to his manifesto promise not to raise taxes, fuelling speculation that the government will row back on the pledge at next month’s Budget.
Conservative leader Kemi Badenoch asked the prime minister on Wednesday whether he stuck by his pledge not to raise income tax, national insurance or VAT.
Chancellor Rachel Reeves is facing the prospect of tax rises or spending cuts as she looks to balance the books at the November Budget.
Answering Ms Badenoch during Prime Minister’s Questions, the PM pointed to some economic figures, before saying that “the Budget is on 26 November and we will lay out our plans”.
He added: “But I can tell the House now that we will build a stronger economy, we will cut NHS waiting lists and deliver a better future for our country.”
The Conservative leader said it was a different response to one that she got to a similar question in the summer, to which Sir Keir responded: “As she well knows, no prime minister or chancellor will ever set out their plans.” He then attacked the Conservative record on the economy.
“The figures on the productivity review that’s being undertaken, this is a judgment on their record in office,” he said.
“Those figures are now coming through, and they confirm that the Tories did even more damage to the economy than we previously thought.
“Now, we will turn that around. We’ve already delivered the fastest growth in the G7 in the first half of this year, five interest rate cuts in a row, trade deals with the US, EU and India. They broke the economy, we’re fixing it.”
The Institute for Fiscal Studies has warned that Ms Reeves could need to find £22bn of tax rises or spending cuts if she is to restore the £10bn of headroom she left herself against her debt targets in the spring.
That gap is the result of higher borrowing costs, more persistent inflation and weaker growth, along with spending commitments such as partially reversing the cut to winter fuel payments and watering down its plans to cut welfare.
The UK’s bleak fiscal outlook has seen the pound fall sharply this week, with sterling tumbling to a two-and-a-half-year low against the euro and a three-month low versus the US dollar, down 0.4 per cent at €1.13 and 0.4 per cent lower at $1.32.
Writing in The Guardian on Wednesday, the chancellor argued that Brexit and the pandemic had left “deep scars” on the UK economy.
“Austerity, a chaotic Brexit and the pandemic have left deep scars on the British economy that are still being felt today. But the task facing our country – facing me as chancellor – is not to relitigate the past or let past mistakes determine our future,” she said.
Ms Badenoch suggested cuts to welfare spending as an alternative to tax rises, and said she had offered to work with the government.
She told the Commons: “Last month I offered to work cross-party with him to bring down welfare spending, because he knows and we know that he’d rather dip into people’s pockets than upset the people behind him. Instead of tax rises, will he work with us to find a way to cut welfare spending and get Britain working again?”
