Labour’s upcoming Budget faces criticism as Badenoch says it is already falling apart

Conservative leader Kemi Badenoch has sharply criticised the Labour government, claiming its Budget is unravelling before it has even been presented. Her comments came after Chancellor Rachel Reeves appeared to step back from raising income tax rates, a move that ministers had previously suggested was under consideration despite an election promise not to do so.

Government sources said last week that Reeves changed course following more positive economic forecasts. But during Prime Minister’s Questions, Badenoch pressed Prime Minister Sir Keir Starmer on whether the government would instead break another pledge by freezing income tax thresholds. Starmer refused to give a clear answer, saying only that full details would be revealed when the Budget is announced next week.

Badenoch described the situation as chaotic and accused the government of creating uncertainty by first suggesting a rise in income tax and then abandoning the idea. She told MPs this appeared to be the first Budget to fall apart before the chancellor had even delivered it. She went on to say the government’s mixed signals were damaging confidence in the economy.

The Conservative leader also referred to Reeves’ comments from her previous Budget, when the chancellor said she would honour every tax promise made in Labour’s manifesto and insisted she would not extend the freeze on income tax and National Insurance thresholds because it would place greater pressure on working families. Badenoch demanded that the prime minister confirm there would be no freeze, but Starmer again avoided giving a direct response.

Starmer said the Budget would prioritise reducing NHS waiting lists, cutting debt and addressing the cost of living. He argued that Labour would not impose austerity or repeat the borrowing mistakes made by the short-lived Liz Truss government. Badenoch rejected these reassurances and said it was becoming clear the government was preparing to freeze thresholds.

She questioned how the public could trust next week’s Budget if Reeves broke what she described as a clear commitment. Reeves will present the Budget on 26 November, followed by Badenoch’s response for the opposition.

Labour promised in its 2024 general election manifesto not to raise taxes on working people. This included no increases to National Insurance, VAT or any income tax rate. However, critics point out that extending the freeze on tax thresholds would still result in many people paying more tax over time.

If the freeze continues, more workers will move into higher tax brackets or pay tax for the first time when their wages rise. According to the Institute for Fiscal Studies, extending the freeze by two years could raise more than eight billion pounds annually. It would also mean that even low income earners, including those on minimum wage who work part time, could be brought into the tax system sooner than expected.