Rachel Reeves has said there will be no budget until September if Labour wins the election, and the party will not announce any additional tax measures beyond what it has already promised.
The party has ruled out increases to income tax, national insurance, corporation tax or any form of wealth tax and Reeves said there would be no new measures proposed or “black holes” to fill.
Keir Starmer later backed the pledge, saying there would “no fiscal surprises” in the manifesto.
At her first major speech of the campaign, Reeves told the Guardian that all the tax measures the party was planning in order to fund its current commitments had already been announced. “There are no additional tax rises needed beyond the ones that I’ve said.”
Labour has already said it will fund various pledges with measures including a windfall tax on oil and gas firms, adding VAT to private school fees, taxing private equity bonuses, and a further tightening of the non-domicile tax system.
Reeves ruled out a snap budget or fiscal statement should Labour win the election, saying she was committed to receiving forecasts from the Office for Budget Responsibility before any such event.
“The OBR requires 10 weeks’ notice to provide an independent forecast ahead of a budget and I’ve been really clear that I would not deliver a fiscal event without an OBR forecast,” she said. That timeframe would mean no budget until mid-September.
Reeves and Starmer, have previously ruled out a rise in national insurance and income tax, though over the weekend Starmer did not explicitly rule out a rise in VAT, which Reeves has now done by implication.
However, she hinted during her Q&A session at Rolls-Royce, in Derby, on Tuesday that there was no guarantee Labour would be able to allow a rise in the personal allowance. Not doing so would in effect be a tax rise as wage inflation pushes people into higher tax bands.
“Unlike the Conservatives, I won’t make unfunded commitments, because the truth about unfunded commitments is that no one has any confidence that you can deliver on them,” she said.
Reeves emphasised again in later interviews that there would be no new tax rises over the parliament in order to deliver what Labour was promising in the election campaign – though she said she was not going to “write the budget” on the campaign. She also said she did not anticipate any “black holes” that Labour would need to fill with surprise tax increases.
“There is nothing in our plans that requires any further increases in taxes, I have confidence in that. Voters can have confidence,” she told Sky News. “We put out the limited tax increases that a Labour government will introduce and people could be confident that we will not be going further than that … There are no further increases in tax that we are planning or that we need to fill any black holes.”
The Institute for Fiscal Studies, a leading economic thinktank, has called for a more transparent conversation about tax and spending. The director of the IFS, Paul Johnson, said recently that both parties must “reckon with the reality of the economic and fiscal context in which this election is taking place”.
He said they would face stark choices in government and that parties would need to choose between cutting spending, raising taxes further or increasing annual borrowing.
“The parties might well be reluctant to tell us which of these they would opt for upon taking office. That doesn’t mean that we should refrain from asking them,” the IFS report said.
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In her speech, which came as Labour was endorsed by 120 major business leaders in a letter to the Times, Reeves said her party would become the natural home for business. But the letter drew criticism from the Tories, who said some of the companies involved were defunct and that there were no FTSE 100 companies among the signatories.
Starmer laughed off the criticism during a visit to Airbus in Stevenage on Tuesday afternoon, challenging the Conservatives to “produce their own list”.
At her speech at Rolls-Royce, Reeves said the economy would be a major theme of Labour’s election campaign. “We will fight this election on the economy. Every day we will expose the damage the Conservatives have done, the further damage they threaten to do. And we will set out Labour’s alternative.”
Among those who have signed the endorsement of Labour are Charles Harman, a former vice-chair at JP Morgan Cazenove, Andy Palmer, the former Aston Martin chief executive and John Holland-Kaye, a former chief of Heathrow airport.
The Unite union called on Labour to distance itself from Holland-Kaye, citing fire and rehire practices at Heathrow during the pandemic, a practice Labour has pledged to ban. Some unions say Labour’s promise on workers’ rights has been watered down to allow businesses to fire and rehire in desperate circumstances.
The Unite general secretary, Sharon Graham, said: “Labour must immediately distance itself from John Holland-Kaye, who was responsible for one of, if not the most brutal example of fire and rehire during the Covid pandemic.”
