General election: May paves way for end to pledges on NI and income tax

Theresa May is likely to abandon the Tories’ “triple tax lock” commitment and has ruled out increases to VAT, but signalled that she could allow a future Conservative government to raise national insurance and income tax.

The prime minister, whose government was recently forced into an embarrassing U-turn over plans to raise national insurance for the self-employed, said she did not want to make promises that she would be unable to keep. As such, she would not commit to renewing her predecessor’s policy that prevented the government from increasing any of the three major taxes: VAT, national insurance and income tax.

However, she insisted that overall her party would reduce the taxes on working families, with possible plans to further raise the personal allowance threshold, the level at which income tax kicks in. The Conservatives are also considering tax breaks to help people fund care for elderly relatives.

They could also save billions by weakening the triple lock on pensions, which protects the rate of increase, to a double lock, and reinvesting the money into long-term spending on social care. Sources have suggested that the party is also considering taxes on highly expensive homes that would hit the wealthiest families.

The Guardian understands that internal Tory figures have May polling well ahead of the party as a whole, which is why she is being asked to be “front and centre” of the election campaign.

In her first major broadcast interviews of the general election, the prime minister made a specific pledge on tax. “We won’t be increasing VAT,” she told ITV’s Robert Peston. The prime minister said her “instinct and what I absolutely want to do is to be able to reduce taxes on working families”, but she did not make the same pledge on either national insurance or income tax.

The unexpected promise on VAT came after the shadow chancellor, John McDonnell, made the same pledge, with a promise to “protect middle and low earners”.

“I will say also, we will not increase VAT, and I want you to ask Theresa May that question as well because if you remember, last time the Tories promised no increase in VAT, and then they increased it afterwards. That’s a regressive tax that falls on some of the poorest and middle earners as well, so that’s one guarantee we’re giving.”

A Labour source claimed that McDonnell had intended to “lay a trap” for the prime minister, and said she had been “bounced into an unplanned VAT commitment” that she had not raised earlier in the morning. They said the plan was to push her to make similar commitments in other areas. The Conservatives strongly denied the suggestion, making clear that the prime minister had simply been asked about the issue.

May had earlier appeared on the BBC’s Andrew Marr Show, where she said: “We have absolutely no plans to increase the level of tax … It would be my intention as a Conservative government and a Conservative prime minister to reduce the taxes on working families.”

She was also asked about stories of nurses being forced to go to food banks because of an effective 14% pay cut since 2010 reported by the Royal College of Nursing (RCN). The prime minister insisted that she wanted a “country that works for everyone, not just the privileged few”.

When pushed by Marr, she argued that NHS workers had seen a pay increase of 3% if you combined basic pay with progression pay and insisted that her government was putting an additional £10bn into the health service. She added: “There are many complex reasons why people go to food banks.”

The response led to an angry reaction from nursing chiefs. The RCN’s chief executive, Janet Davies, said the 1% cap on basic pay increases in the public sector was “fuelling a recruitment and retention crisis” that was risking patient safety.
“Theresa May was explicitly asked to admit that it is wrong for nurses to be forced to use food banks in 2017. Not only did she fail to acknowledge it is wrong, she failed to even mention nurses or their work in her reply,” she said.
“Nurses should not have to fund the NHS deficit from their own pay packets. Too many are struggling to make ends meet, turning to food banks and hardship grants in desperation.”

The Labour MP Yvette Cooper posted on Twitter: “This is Theresa May’s style – rigid rhetoric far from reality, from school budgets to nurses pay, Brexit to tax.”

McDonnell said his party would demonstrate “item by item” how it would pay for spending commitments. However, he promised not to raise income tax for “middle and low earners”. He also vowed to overhaul workers’ rights with a 20-point plan that would outlaw zero-hours contracts and double paternity leave.

Speaking to Peston, McDonnell also talked about a return to collective bargaining in the workplace and a return to pay deals being set on an industry-wide basis. “What’s happened in this country over the last 20-odd years is collective bargaining has declined. Eighty per cent of our workforce used to be held by collective bargaining. It stands at about 20% now, and that’s eroded wages overall,” he said, in a move that was described by parts of the media as a return to the 1970s.

May’s decision not to commit to the tax lock, which was a key policy for Cameron in 2015, came after her chancellor, Philip Hammond, said the policy had tied his hands.

Hammond was forced to reverse a budget decision to raise national insurance for self-employed workers as part of an effort to close the gap between that group and other workers. He signalled the change of heart in a letter to the Tory MP Andrew Tyrie, who chairs the Treasury select committee, after anger among the party’s MPs.

The chancellor said the policy had not breached the tax lock in technical terms but admitted it had gone against the “wider understanding of the spirit” of the party’s 2015 manifesto. However, he has made clear that he would like to revisit the issue after a review of the rights of self-employed workers by the former Labour adviser and Royal Society of Arts chief, Matthew Taylor.

May will continue her election tour on Monday with a visit to a northern Labour seat, as polls tighten a small amount but still suggest a strong Tory lead, including among working-class voters.

One policy that she hopes will reach beyond the core Conservative vote is a promise to strengthen the pensions regulator to be able to block corporate takeovers if they are used to strip pension funds. Tories said the policy was formulated as “employees of large, household-name companies have found their pensions put at risk by irresponsible behaviour of bosses”, in an apparent reference to Philip Green and the BHS scandal.