Just one in five voters back Rachel Reeves’s reported plans to break Labour’s manifesto pledge not to raise taxes on working people – even if they acknowledge it’s in the country’s interests, according to new polling.
But it also indicates that the political damage inflicted by raising income tax would be reparable if it was paired with taxes on the wealthy and a positive vision for change, such as clear, achievable targets to improve public services.
A new report from cross-party think tank Demos, shared with The Independent, showed that just 20 per cent of the public believe it is acceptable for the government to break promises on tax, even if that’s what the country needs.
Reform supporters hold this view particularly strongly, with 67 per cent saying it would not be acceptable, while just 12 per cent say it would be. Labour supporters, however, are divided on the issue, with 38 per cent either side.
It comes after The Times reported that the chancellor has told the Budget watchdog that she plans to increase income tax as she seeks to repair Britain’s battered public finances.
Ms Reeves is reportedly considering a 2p rise in income tax, paired with a 2p cut in national insurance, as part of an attempt to shift the burden of the increase from workers and towards other groups, such as pensioners and landlords in a move which could raise more than £6bn a year.
In a major speech last week, the chancellor put the country on notice that sweeping tax rises are coming in her Budget, warning “we will all have to contribute” to building a new future for Britain.
Promising to put the national interest above “political expediency”, the chancellor signalled she is ready to break Labour’s manifesto commitment not to raise income tax, personal national insurance or VAT.
The Demos report, which drew on a survey of 2,000 people, says that “while the act of breaking a promise is judged very badly by the public in theory, the public may not feel so pessimistic about it in practice”.
It argues that consent for a broad-based tax rise could be better achieved if it was “combined with reforms to tackle tax advantages for landlords, partners and investors relative to employees, ensure high-value properties pay a fair share, and properly tax the social harms of gambling”, as well as a “clear message about what impact the revenue will have for the country and people’s lives, the policies and actions which will deliver that, and the accountability that the government will impose on itself to ensure that change is delivered”.
The report adds: “The public is asking politicians for vision and conviction. Risk aversion and political paralysis is leaving voters feeling unheard, as the political system appears slow or unable to address their daily challenges such as the cost of living or broken public services.”
The report also indicates that concerns about tax rises were mainly driven by the fact that raising broad-based taxes meant ‘working people’ paying, rather than those with higher incomes or wealth.
The think tank tested a series of media simulations, presenting nationally representative groups of the public with mocked-up news articles announcing different types of tax rises, which showed that an income tax rise didn’t receive as negative a response if it was combined with higher taxes on wealth.
People expressed how, when seeing the income tax rise alongside the other tax rises, it felt “less personal”, as it wasn’t just targeting “working people”, Demos’ report showed.
The report’s findings were echoed by Patrick English, director of political analytics at YouGov, who told The Independent that while the public “definitely don’t want personal tax rises… they certainly do want the government to take concrete action on things like the cost of living, public services, and the NHS”.
“If the government successfully land any personal tax rises as necessary for, or even better directly linked to, solving those problems – and people then go on to feel those problems easing – I think the long-term polling risk of any such moves will be fairly minimal,” he said.
One Labour backbencher said he thinks the public are likely to “get over a tax rise pretty quickly, if they believe we have a plan”.
“They are asking us to give them hope – that’s what we need to do. Explain a clear plan of what the country will look and feel like, rather than acting like a new management team of a struggling company,” they said.
Income tax is now widely expected to be among the increases when Ms Reeves makes her statement on 26 November.
Chris Curtis, MP for Milton Keynes North and chair of the Labour Growth Group, said the most important thing heading into the Budget is for the Treasury to demonstrate “credibility to markets so that borrowing and debt interests costs come under control”.
“Regardless of the approach the chancellor chooses to adopt on tax and spending she must put in a much larger buffer of fiscal headroom so we’re better positioned to absorb the shocks of an increasingly unstable world, and provide confidence to investors and the public”, he said.
But pollster Scarlett Maguire, founder and director of Merlin Strategy, said breaking a manifesto pledge could be “politically disastrous”.
“People do remember that Labour said it wouldn’t raise taxes (even if they always suspected they might), and the biggest brand problem Keir Starmer has is a persistent perception that he is untrustworthy and goes back on what he says,” she told The Independent.
Meanwhile, former shadow minister and Labour peer Thangam Debbonaire, said she is “not quite sure” why the party promised not to raise income tax, national insurance or VAT before the last election, when she was in the shadow cabinet.
Asked whether she thinks the chancellor should raise income tax, she told Times Radio: “I wouldn’t start from here. I’m not quite sure why we felt we had to make that commitment in the general election at the point that we did.”
She added: “I really wish we weren’t in this position… I do think it’s a problem when we are trying to restore trust in politics. Having said that, I do think it’s important that Rachel sticks to the fiscal rules that she is focusing on stability and growth.”
Last week it was revealed that Sir Keir’s cabinet is deeply divided over the issue, with senior ministers fearful further measures to target the rich in next month’s Budget could accelerate the wealth exodus from Britain.
Cabinet ministers told the The Independent they believe Ms Reeves has already gone too far with measures targeting the wealthy and businesses, and have urged the chancellor to change course if she is to have any hope of achieving growth.
