RShadow chancellor Rachel Reeves has been warned she is “boxing herself in” over Labour’s tax pledges.
Ed Balls, the former shadow chancellor, said Reeves was “absolutely removing room for manoeuvre” and that could prove problematic if the Labour Party’s “fiscal inheritance turns out to be tougher” than expected.
Balls’ comments, made on his Political Currency podcast which he hosts with George Osborne, came after Reeves told Labour’s business conference yesterday there would be no rise in corporation tax during the first term of a Labour government.
Reeves announced Labour would not increase corporation tax from its current level of 25 per cent — a pledge that was criticised by those on the left of the party.
Balls said: “I think the thing which worries me is the extent to which Rachel is choosing, on tax, to box herself in quite a lot.
“She doesn’t want to raise taxes on working people, she doesn’t want to raise wealth taxes, she’s now not going to have a bank bonus cap and she has also announced at the Labour business conference there’ll be no rise in corporation tax either in the first parliament.
“And when you think, you know: No rise on taxes on working people, no wealth taxes, no [cap] on bankers’ bonuses, no rise in corporation tax.
“If the fiscal inheritance turns out to be tougher, if the pressures on public services are as people expect, this is going to be a very, very difficult task for her and she’s absolutely removing room for manoeuvre.”
The comments come amid significant media speculation that Labour could be about to ditch its £28 billion green energy investment pledge.
In an interview with Sky News, shadow chancellor Reeves refused to state whether she stands by that plan and said it would depend on the financial state of the country.
“The fiscal rules will come first and all of our policies will be subject to the iron discipline,” she said.
Meanwhile, Labour Party sources told The Guardian that the £28 billion figure will be dropped but the broader commitment to boosting green infrastructure will be retained.
A shadow minister told the newspaper: “The £28 billion is definitely going as a figure. It will be changed to specific outcomes linked to specific investment, rather than being a random figure to be allocated at a later date.”
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