Workers on average incomes will not see their taxes go up as Rachel Reeves seeks to find billions in the autumn Budget, a minister has promised.
With a series of U-turns having blown a major hole in the public finances, roads minister Lilian Greenwood said “people who earn around average income” will not be targeted.
She was asked to clarify comments by transport secretary Heidi Alexander, who said on Sunday that the government would not increase taxes for those on “modest incomes”.
Ms Greenwood told Sky News: “I think it means people who earn kind of around average income.
“Our promise when we came in was that we wouldn’t hit working people with increases in employee national insurance, in income tax or VAT, and we’ve absolutely stuck to those promises.”
And, amid growing calls from Labour MPs for a wealth tax to plug the gap in the government’s spending plans, Ms Greenwood said: “These are decisions for the chancellor, but clearly we’ve always said that we think those who’ve got the broadest shoulders should bear the greatest burden.”
Her failure to rule out a wealth tax will add to growing fears among the super-rich in Britain after more billionaires left the UK in the last two years than any other country. Analysis by consultancy New World Wealth showed a quarter of the UK’s billionaires, 18 in total, left the country in 2023 and 2024.
Ms Reeves has refused to rule out tax rises at the Budget after Labour MPs forced her and Sir Keir Starmer to scrap planned welfare reforms, leaving a £5bn hole in the government’s balance sheet.
She is under intense pressure to find more money after the Office for Budget Responsibility (OBR) this week warned that the UK’s finances are on an “unsustainable” path that the government “cannot afford” in the longer term.
Sir Keir last week left the door open to extending “stealth taxes” – as well as the introduction of a wealth tax – as his government struggles to balance the books.
The prime minister reiterated that Labour would stick to its manifesto pledge and ruled out increases to income tax, VAT and national insurance, but he did not confirm whether the government was planning to lift the freeze on income tax thresholds in 2028.
The freezes mean more and more people are dragged into paying higher rates of income tax every year as the thresholds fail to keep pace with inflation.
Lord Kinnock last week suggested a wealth tax would bolster the public finances without breaking Labour’s pledges.
Union leaders, including Sharon Graham of Unite, are also pressuring ministers to consider the move.
Ms Greenwood’s comments come ahead of the chancellor’s keynote Mansion House speech in the City of London, in which she will announce the easing of mortgage rules in a bid to boost economic growth.
Changes will include lowering the minimum salary needed for a mortgage to £30,000 from £35,000 for an individual and to £50,000 from £55,000 for a couple on a joint income.
It is part of a wider package of reforms which will see a bonfire of red tape for financial services as Ms Reeves urges businesses and investors to “take risks again”, according to a Treasury source, following the caution which settled in after the 2008 banking crash.
But it comes as the new director of the influential Institute for Fiscal Studies (IFS), Helen Miller, is set to warn that despite Ms Reeves’s promises, the economy under this Labour government continues to “limp from fiscal event to fiscal event”.
