Rachel Reeves has decided to scrap proposed income tax hikes originally included in the Labour Party’s Autumn Budget. Sources reveal that the primary tax increase measures have been rejected by both Prime Minister Keir Starmer and Chancellor Reeves, signaling a significant policy U-turn.
According to the Guardian, plans that would have broken Labour’s manifesto pledge on income tax have now been shelved. The Financial Times first reported this change, noting that the revised approach was communicated to the Office for Budget Responsibility on Wednesday. Although Ms. Reeves intends to revisit tax thresholds, which could subtly raise income tax levels, this is viewed as a less direct approach to increasing taxes.
Ms. Reeves stated just ten days ago, “As chancellor, I have to face the world as it is, not the world that I want it to be,” reflecting the pragmatic shift in fiscal policy.
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This reversal coincides with Prime Minister Keir Starmer attempting to move past internal party tensions after allegations surfaced about briefings concerning a potential leadership challenge from Wes Streeting. Starmer assured that no such leaks originated from Downing Street and emphasized his commitment to addressing any internal disloyalty. He said, “I intend to deal with it,” and promised action against those responsible for harmful briefings.
Despite official efforts to quell rumors, some MPs expressed skepticism. One MP told the Guardian, “He’s made Wes a martyr, and many here acknowledge how effective he was on the radio.” Another Labour insider warned that fixation on internal briefings misses the broader issue, stating, “The real government killer is the drift in direction, not briefings. The pressing question everyone should ask is why this government feels so panicked and under siege — because if they are, then we all are.”