Angela Rayner has refused to repeat Rachel Reeves’ pledge that taxes will not be increased at the next budget.
Standing in for Sir Keir Starmer at PMQs, the deputy prime minister was pressed on warnings from economists that tax rises are looking increasingly inevitable in the autumn to fund the chancellor’s spending plans.
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The Tories want a commitment that this will not be the case in order to support the government’s welfare bill, which is under threat from a growing and significant rebellion of Labour MPs.
Shadow chancellor Mel stride, standing in for Tory leader Kemi Badenoch, said even if the planned benefit cuts go through, “almost every respected economist now says tax rises are all but inevitable in the autumn”.
He said Ms Reeves promised after her last budget that this will not be the case and asked Ms Rayner to give “certainty” to businesses and repeat that pledge.
Ms Rayner said the question was “a bit rich” given the Tories raised taxes to record highs before the last election, adding: “I take no lectures”.
Mr Stride pressed her on analysis from the Institute of Fiscal Studies (IFS) that local authorities will have to raise council tax to the maximum level allowed to pay for local services.
Angela Rayner
He said: “The IFS says that the spending review will mean the biggest council tax increases in a generation.
“A £7bn tax rise and yet the chancellor and the prime minister have repeatedly claimed that the government will not raise taxes on working people. So can I ask… why doesn’t she think the council tax is paid by working people?”
Ms Rayner again attacked the Tories’ record, saying he had “absolute nerve” as council tax “rose every single year under that government”.
She said Labour was “delivering money for local government, when they had austerity, put taxes up and ruined the British economy”.
Ms Reeves unveiled her spending review earlier this month, which outlined how much day-to-day funding government departments will get over the next three years, along with capital spending for longer-term projects.
The chancellor has insisted her plans are fully funded, but Paul Johnson, director of the IFS, has said she has left herself such little headroom that “any move in the wrong direction” for the economy would “almost certainly spark more tax rises”.
Any tax hikes would likely spark a backlash given Ms Reeves’ said last November that there would be no more tax hikes during this government’s term, following her decision to raise employer National Insurance in the autumn budget.
The government is facing further trouble as a key part of the spending review was a package of reforms aimed at shaving £5bn off the welfare budget by 2030.
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Sky’s Tamara Cohen explains.
However, an unprecedented rebellion of over 100 MPs is threatening that legislation, which is due to be voted on next Tuesday.
Ms Rayner today insisted the vote will go ahead.
She said: “I’ll tell the right honourable member why we’re pressing ahead with our reforms.
“That is because we’re investing £1 billion into tailored employment support, a right to try to help more people back into work and ending reassessments for the most severely disabled who will never be able to work.
“We won’t walk away and stand by and abandon millions of people trapped in the failing system left behind by him and his colleagues.”
