Jeremy Hunt challenges Rachel Reeves not to increase taxes in first Budget

Jeremy Hunt
Jeremy Hunt told Rachel Reeves: 'You have refused to rule out explicitly a range of further tax rises' - PA Video/PA

Jeremy Hunt has challenged Labour to promise there will be no extra tax rises in the party’s first Budget if it wins the general election.

The Chancellor made the demand in a letter to Rachel Reeves, his opposite number as Labour’s shadow chancellor.

The Labour Party has put a handful of specific tax rises, such as applying VAT to private school fees, in its election manifesto.

But Labour figures are reportedly looking at bigger tax rises, such as increases in council taxes and capital gains tax (CGT), for their first fiscal event if they win office.

Think tanks have also suggested that Labour – as well as the Tories – would need to increase tax or oversee deep cuts in unprotected government departments after the election.

Mr Hunt wrote in his letter: “It is vital people can plan their finances for the year ahead with certainty.

“Throughout this campaign, while you have consistently said that you have no plans for taxes rises beyond those set out in your manifesto, you have refused to rule out explicitly a range of further tax rises, including on people’s homes, savings and pensions.”

He added: “Can you therefore confirm that, should Labour win the next general election, in your first fiscal event you will not include any tax rises beyond those set out in your manifesto?”

Mr Hunt then listed a series of taxes he wanted Ms Reeves to rule out, such as taxing the state pension, increasing the number of council tax bands or increasing stamp duty.

Rachel Reeves
Rachel Reeves called Mr Hunt's move 'nonsense' - Wattie Cheung

A spokesman for Ms Reeves replied: “It shows how desperate the Conservatives‘ campaign has got that they have asked Jeremy Hunt to come out of hiding and put his name to this nonsense. It’s time for change.”

The intervention is the latest attempt by the Conservative election campaign to force people to focus on the possibility of Labour tax rises.

Almost every day in the month-long campaign there have been planned tax attacks, with the Tories urging people to “start saving” if they think Labour is going to win office.

Labour is promising not to increase the rates of income tax, National Insurance, VAT and corporation tax. They have also ruled out charging CGT on people’s primary residences after the Tories alleged the move could be coming.

Pledge to reduce taxes

But the party has not explicitly ruled out increases in council tax or CGT. Instead there is a wider pledge to reduce taxes on “working people”, a phrase which remains open to definition.

Whichever party forms the next government a fiscal event – either a Budget or an Autumn Statement – would probably be triggered within weeks.

The Office for Budget Responsibility must be given 10 weeks’ notice by the Treasury to produce a forecast before such an event.

If Labour wins the election, as opinion polls suggest, preparations are already being made by party insiders for a Budget in September 2024.

Rishi Sunak could make the same challenge to Sir Keir Starmer, the Labour leader, in the second and final head-to-head debate on the BBC on Wednesday evening.