Labour say manifesto stands ‘today’ as Reeves ducks VAT hike

The Chancellor would not rule out fresh rises to VAT ahead of her speech to Labour Party Conference later today, when pressed on the issue by LBC’s Nick Ferrari this morning. 

Asked whether Brits could face increases to the retail levy, Reeves said: “You’ll know we made those commitments in our manifesto, and those commitments stand.” 

Her answer relates to promises by the Labour Party not to raise headline personal taxes on “working people”, including VAT, at the general election last year. 

Reeves added: “If you look at my record, at the budget last year lots of people said we would have to break manifesto commitments, to renege on them. And I didn’t.”

Shortly after Reeves finished her conference speech, where she took swipe at opponents across the political aise, chief secretary to the Prime Minister Darren Jones refused to rule out further tax hikes.

Labour committed not to raising tax on working people – with increases to VAT, national insurance and income tax – in its 2024 election manifesto.

Jones said: “All I’m saying is, today the manifesto stands. We’ve got a budget process to go through, and any decisions will be announced to parliament in the normal way.”

Yesterday, when the same question was put to Sir Keir Starmer, he repeatedly stopped short of ruling out a hike in the tax and said only that the “manifesto stands”.

Can a ‘Youth Guarantee’ make a dent?

Reeves announced the launch of the government’s new ‘Youth Guarantee’ in her conference speech – a pledge that any young person who has been receiving universal credit for more than eighteen months will be offered a “guaranteed job”. 

But – according to The i Paper – those who turn down the job offered to them could lose some or all of their benefits. 

This “Youth Guarantee” scheme is an effort from the government to trim its ballooning welfare bill, following scuppered efforts earlier this year under previous DWP secretary Liz Kendall – which were thwarted by widespread threats of rebellion from Labour MPs. 

Reeves clarified on LBC that the scheme will be for 18 to 24 year olds, with funding carved out from the spending review in June.

However, Reeves would not put a figure on the policy’s price tag, saying that cost details would have to wait for the Budget in November.

Speaking to BBC Radio 4’s Today programme ahead of her conference speech, Reeves was asked whether she stood by her statement to the Confederation of British Industry that Labour was not coming back with “more borrowing or more taxes”.

The Chancellor replied: “Well, look, I think everyone can see in the last year that the world has changed, and we’re not immune to that change. Whether it is wars in Europe and the Middle East, whether it is increased barriers to trade because of tariffs coming from the United States, whether it is the global cost of borrowing, we’re not immune to any of those things.”

She said the Office for Budget Responsibility was reviewing productivity numbers, which needed to be factored in.

Reeves continued: “It’s very important that we maintain those commitments to economic stability because we rely on people to buy Government debt to be able to finance the things that we’re doing as a country. I wish it wasn’t so, but I am Chancellor in the world as it is, not the world that I might wish it to be.”

The King in the North looms large

When asked about repeated interventions from the Mayor of Manchester Andy Burnham, who pitched a radical departure from government economic policy to the New Statesman last week, Reeves said that further borrowing and easing of fiscal rules “makes no sense”. 

The Chancellor told LBC: “Anybody that says you can just borrow more, I do think that risks going the way of Liz Truss.”

“There is nothing progressive, nothing Labour about that.”

Burnham has already made a number of critical comments about the government’s direction at fringe events.

The Manchester Mayor accused the Prime Minister of instilling a “climate of fear” over the Labour Party, and would not

Former Labour home secretary Alan Johnson told Laura Kuenssberg’s Sunday programme that Burnham should “go and find a television camera, stand in front of it and say ‘I have no intention of standing against the elected leader of our party”.