Treasury minister says ‘headline' rate of income tax won't go up, in hint thresholds might be frozen in budget

The Guardian

14-07-2025

Update:
Date: 2025-07-14T08:31:38.000Z
Title: Darren Jones
Content: Good morning. This is the last full week the Commons is sitting before the summer recess starts (on Tuesday next week) and, although there is a fair amount coming up (see below), there is no big story dominating the news agenda. The national newspapers are all splashing on different items – which is normally a sign that it was a slow news day yesterday.
The government wants to talk about its new £500m 'better futures fund'.
And , chief secretary to the Treasury, has been in the broadcast studios this morning to promote it – as well as giving an interview to my colleague Heather Stewart.
But, as is often the case, in search of stronger news, broadcasters have been trying to tease out details of what might be in the budget in the autumn. And they may have made a tiny bit of progress.
At PMQs last week Keir Starmer said that he remained committed to the tax pledges that Labour made in its manifesto. That might sound straightforward, but it isn't, because there is some ambiguity as to what they mean.
People thought Labour promised not to raise income tax, VAT or national insurance contribtions – which are levied on employers and employees. But in the budget last year Rachel Reeves did put up employer NICs and, when accused of breaking a manifesto promise, she highlighted the eight-word preamble to the pledge, which in retrospect could be read as a hint that employer NICs were not exempt.
Labour will not increase taxes on working people, which is why we will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT.
The person who wrote the manifesto clearly knew what was coming – but the clue was hidden so well that almost no one managed to decypher it.
In an interview on ITV's Good Morning Britain Jones said this.
The thing I can tell you is that our manifesto commitment coming into this election was that we were not going to increase the headline rate of income tax or employee national insurance on working people in the pay slips that people get when they go to work or on VAT because we know that that disproportionately affects people on lower incomes because they spend more of their money on the day to day shop, essentially.
In fact, the manifesto does not mention the 'headline' rate of income tax. But the fact that Jones sees this as relevant can be seen as yet another hint that Rachel Reeves is considering extending the freeze on income tax thresholds in the autumn. This is seen by economists as very likely, and was not ruled out by Starmer at PMQs last week.
Ed Balls, the former Labour shadow chancellor who is now a broadcaster and podcaster, regularly argues on his Political Currency podcast that freezing tax thresholds would in practice be a breach of the manifesto, because it would amount to a tax increase for workinng people. Jones's comment can be seen as the rebuttal argument.
In his interviews Jones also declined to rule out a wealth tax, as other ministers, have done. But he also suggested that people were 'getting a bit carried away' in interpreting what Heidi Alexander, the transport secretary, said about tax yesterday. Alexander told Sky News:
We made a commitment in our manifesto not to be putting up taxes on people on modest incomes, working people.
The Telegraph has interpreted this as meaning that taxes will rise for middle-class workers. But, in his Good Morning Britain interview, Jones said Alexander was just referring to the manifesto promise. Asked what 'modest incomes' meant, he went on:
Modest income means different things to different people. But it's not entirely relevant, because the thing that is relevant is our manifesto commitment not to increase national insurance or employee national or income tax in the payslips that people receive every month.
Jack Maidment from the Telegraph argues that the mixed messaging is a bit of a mess.
Treasury minister says Labour's 'working people' tax pledge refers to 'anyone that gets a payslip, basically'.
Significantly broader than Transport Sec Heidi Alexander's definition yesterday of 'people on modest incomes'.
What a mess, and not for the first time.
Here is the agenda for the day.
10.30am: Sajid Javid, the former Tory health secretary, gives evidence to the Covid inquiry about the impact of the pandemic on the care sector.
Morning: Rachel Reeves, chancellor, speaks to broadcasters on a visit in Wigan where she is promoting plans for a £500m 'beter futures fund'.
11.30am: Downing Street holds a lobby briefing.
2pm: Wes Streeting, health secretary, gives evidence to the health committee.
2.30pm: Angela Rayner, deputy PM and housing secretary, takes questions in the Commons.
After 3.30pm: Ed Miliband, energy secretary, is expected to make a statement to MPs about the state of the climate report.
Afternoon: Keir Starmer hosts Petr Fiala, prime minister of the Czech Republic, at Downing Street.
5pm: Pat McFadden, Cabinet Office minister, gives evidence to the joint national security strategy committee.
And at some point today the Department for Business and Trade publishes a green paper on the Post Office.
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