Labour has left the door open to higher taxes on the middle classes in Rachel Reeves’ crunch budget later this year.
Transport secretary Heidi Alexander would not rule out tax rises in a series of interviews on Sunday morning, but said the government had pledged not to hike them for “people on modest incomes”.
Asked if the public should expect taxes to go up in the autumn, she said ministers would be guided by “fairness”.
She also told Sky News’s Sunday Morning With Trevor Phillips programme that Cabinet ministers did not “directly” talk about the idea of a wealth tax – being pushed by unions and former Labour leader Lord Neil Kinnock – during an away day at the Prime Minister’s Chequers country estate this week.
The shadow home secretary Chris Philp said her comments “sound to me like a barely disguised reference to tax rises coming in the autumn”.
The chancellor has refused to rule out tax rises at the budget since Labour MPs forced ministers to make a U-turn on welfare reforms, losing the government an estimated £5 billion a year in savings.
She is under intense pressure to find more money after the Office for Budget Responsibility (OBR) this week warned that the UK’s finances are on an “unsustainable” path the government “cannot afford” in the longer term.
On Wednesday, Keir Starmer failed to rule out extending so-called “stealth taxes” – as well as the introduction of a wealth tax – as his government struggles to balance the books.
The prime minister reiterated that Labour would stick to its manifesto pledge and ruled out increases to income tax, VAT and national insurance, but he did not confirm whether the government was planning to lift the freeze on income tax thresholds in 2028.
The freezes mean more and more people are dragged into paying higher rates of income tax every year as the thresholds fail to keep up with inflation.
Lord Kinnock last week suggested a wealth tax would bolster the public finances without breaking Labour’s pledges.
Union leaders, including Sharon Graham of Unite, are also pressuring ministers to consider the move.
Asked by Sky News if such a tax had been discussed at the Cabinet away day on Friday, Ms Alexander said: “Not directly at the away day.”
Pressed on what she meant by not directly, the senior minister replied: “I think your viewers would be surprised if we didn’t recognise that, at the budget, the chancellor will need to look at the OBR forecast that is given to her, and will make decisions in line with the fiscal rules that she has set out.
“We made a commitment in our manifesto not to be putting up taxes on people on modest incomes, working people. We have stuck to that.”
Asked again if this meant there will be tax rises in the budget, Ms Alexander replied: “So, the Chancellor will set her budget. I’m not going to sit in a TV studio today and speculate on what the contents of that budget might be.
“When it comes to taxation, fairness is going to be our guiding principle.”
