Who exactly is a working person?
The run-up to Reeves' speech is being overshadowed by a fresh row too. The Labour government has pledged not to raise taxes on 'working people.' So what exactly does this mean? It seems that the cabinet themselves are not entirely sure. Heidi Alexander, the transport secretary, yesterday suggested that the definition referred to 'people on modest incomes.' But today, Darren Jones, the chief secretary to the Treasury, argued that the term refers to 'anyone that gets a payslip, basically.' That is a significantly broader definition – one which would cover virtually all taxpayers. Jones did not rule out other tax rises either. He said Labour's tax pledge on income tax and national insurance referred to the 'headline rate', leaving the door open to extending the freeze on thresholds. Jones also failed to rule out a wealth tax, merely saying the tax 'commitment in the manifesto was very specific and very clear.'
None of this is particularly conducive to unleashing the 'animal spirits' necessary to generate economic growth. Reeves will be out on the airwaves later today and will inevitably be asked for her own definition of a 'working person.' The Chancellor will want to point to a series of feel-good measures like today's announcement of a £500 million Better Futures Fund for youth services. But for the hard-faced men and women of the City, talk about how the Chancellor is spending their money is unlikely to win many converts. The danger for Reeves is that tomorrow night she receives a similar reception to the stony reply she got at the CBI conference in November. Back then, her promise of 'not coming back for more' in tax was greeted in silence – despite the Chancellor's apparent expectation of applause.
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