Labour’s Shadow Chancellor, Rachel Reeves, is calling for unity among Labour MPs ahead of the upcoming Budget. Over the past year, some Labour members have openly criticized her decisions. This includes various U-turns on policies that have sparked considerable debate within the party.
Concerns Over Budget Proposals
Recent discussions have raised eyebrows regarding potential income tax increases. Such a move would contradict the party’s election manifesto promises. However, the government seems to have stepped back from this proposal.
- A freeze on income tax and national insurance thresholds may be considered.
- This could lead to more individuals paying increased taxes on wages and pensions over time.
Measures to Raise Revenue
In light of an estimated £20 billion gap in public finances, Reeves is exploring alternative ways to generate revenue. Some potential measures include:
- Implementing taxes on high-value homes in England.
- Introducing taxes on electric vehicles and gaming companies.
- Limiting tax breaks on pension contributions, expected to raise around £2 billion.
- Reducing the Cycle to Work scheme tax break.
- Lowering the cash ISA tax-free allowance from £20,000 to £12,000.
Potential Policy Changes
Reeves has proposed the removal of the two-child benefit cap affecting parents of additional children born post-April 6, 2017. The government retains plans to maintain the triple lock on state pensions, ensuring increases are based on inflation, average earnings, or a minimum of 2.5%.
Moreover, an increase in the living wage is on the horizon. In a related move, ministers announced that pre-packaged milkshakes and lattes would be included in the sugar tax, reflecting ongoing efforts to address public health concerns.
As the Budget approaches, Conservative shadow chancellor Mel Stride expressed worries about the potential taxation burden on working families, fearing that taxes will merely shift into the benefits system.
Reeves’ ability to navigate these challenges will be crucial in rallying support from Labour MPs as fiscal policies are put to the test.
