Rachel Reeves was last night accused of plotting a £20billion tax raid on pensions after ruling out a VAT increase.
Work and Pensions Secretary Mel Stride seized on a 2018 pamphlet written by the shadow chancellor in which she suggested tax relief on pension contributions paid by high earners ‘could be restricted’.
Mr Stride said it was evidence that Labour is ‘coming after your workplace pensions’.
He added: ‘Having U-turned on their plans for a VAT increase, Labour face a £38.5billion black hole which they would have to fill with tax increases.
‘Now we know Rachel Reeves’ preference – another tax raid on pensions just like her mentor Gordon Brown’s.’ However, a Labour source insisted the ideas in the pamphlet are ‘not policy and will not feature in our manifesto’.
Rachel Reeves was last night accused of plotting a £20billion tax raid on pensions after ruling out a VAT increase
Work and Pensions Secretary Mel Stride seized on a 2018 pamphlet written by the shadow chancellor in which she suggested tax relief on pension contributions paid by high earners ‘could be restricted’
Treasury analysis of Labour’s plans has already identified a £38.5billion ‘black hole’, which would require the party to raise taxes unless Labour relaxes its spending rules.
The row arose as the controversial freeze on income tax thresholds will finally be lifted in 2028, Jeremy Hunt said yesterday.
The Chancellor said the six-year freeze to pay for pandemic spending would remain in place for the ‘allotted period’, despite warnings it will drag millions into paying more tax.
Labour leader Sir Keir Starmer indicated that his party is set to stick with the freeze. He said on a campaign visit in Wales: ‘On the thresholds, I do think that the burden on working people is too high.
‘But I’m not going to do what the Government is doing and make commitments that we cannot afford. And therefore I’m very clear about the tax that will remain.’
The developments mean that the tax thresholds look set to remain in place until the end of the 2027/28 tax year, regardless of who wins the election.
Labour faced fresh questions about how it would fund its own plans after shadow chancellor Ms Reeves ruled out increasing VAT.
Labour leader Keir Starmer and Shadow Chancellor of the Exchequer Rachel Reeves in Stevenage on May 28
Prime Minister Rishi Sunak and Mel Stride visit a pub in Exeter
Paul Johnson, director of the Institute for Fiscal Studies, said Labour’s decision to rule out increases in the main rates of income tax, national insurance, corporation tax and VAT would leave Ms Reeves little room for manoeuvre – and could force her to target pensions.
Last night a poll by Ipsos for the Financial Times showed 56 per cent expected Labour to raise taxes, and 56 per cent said the same for the Conservatives.
Meanwhile, Goldman Sachs has predicted Labour will rake in up to £9billion a year more in taxes than the Conservatives if it wins the election.
