The New Statesman: politics and culture Why is Rachel Reeves U-turning on income tax?
Nov 14, 2025
Ailbhe Rea, a savvy political editor and policy commentator, joins sketchwriter Will Dunn for a lively discussion about Labour's sudden U-turn on income tax. They delve into how this shift aims to avoid backlash from MPs and voters during tough polling times. The pair explore the implications of breaking manifesto promises, political trust, and potential stealth tax strategies. They also contemplate whether Labour should tackle unpopular decisions and assess if the current financial predicament is self-inflicted or a result of external pressures.
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Manifesto Constraint Shrank Labour's Options
- Labour boxed itself in by ruling out raising main taxes before winning power, limiting policy options in government.
- That manifesto constraint forced Rachel Reeves into repeated tax signalling and tricky fiscal positioning.
Pre-Election Exchange Over Taxing Workers
- Labour officials reportedly warned Rachel Reeves not to rule out taxing working people before the election.
- Reeves allegedly replied, 'that would be a nice problem to have.'
Hypothetical Budget, Real Political Cost
- Labour prepared a 'hypothetical budget' and political groundwork for a big tax move but then abandoned it at the last minute.
- That late U-turn consumed political capital and left the government with reputational damage and fiscal questions.