Chancellor Rachel Reeves is not expected to announce changes to the tax regime in next week’s spring statement, it is understood.
Ms Reeves will deliver her statement on Wednesday amidst a challenging economic landscape, with slower-than-anticipated growth and tightening fiscal headroom. The Office for Budget Responsibility (OBR) is set to release fresh economic forecasts, following the Bank of England’s downward revision of growth predictions for the year. This has led to speculation about potential tax hikes or spending cuts to maintain fiscal discipline.
However, sources suggest that the Chancellor will refrain from making tax adjustments in her upcoming statement. This decision aligns with the stance she took in the autumn budget, where she opted not to extend the Conservative government’s freeze on income tax thresholds beyond April 2028.
The issue of taxation remains a point of contention in political debates. During Prime Minister’s Questions on Wednesday, Conservative leader Kemi Badenoch pressed Prime Minister Sir Keir Starmer on whether he would uphold the Chancellor’s pledge not to extend the tax threshold freeze. Ms Badenoch reminded the House of Commons that Ms Reeves had described the budget as a “once-in-a-parliament” fiscal event, implying that she would not make further changes to tax policy.
“The Chancellor promised a once-in-a-parliament budget, that she would not come back for more,” Ms Badenoch said. “And in that budget, she said there will be no extension of the freeze in income tax thresholds. Ahead of the emergency budget, will he repeat the commitment that she made?”
Sir Keir, however, avoided a direct confirmation and instead criticised the former Conservative government’s economic track record.
“She’s got such pre-scripted questions she can’t actually adapt them to the answers that I’m giving,” Sir Keir responded. “I think she now calls herself a Conservative realist. Well, I’m realistic about the Conservatives.
“The reality is they left open borders and she was the cheerleader. They crashed the economy, mortgages went through the roof. The NHS was left on its knees, and they hollowed out the armed forces.
“This Government has already delivered two million extra NHS appointments, 750 breakfast clubs, record returns of people who shouldn’t be here, and a fully funded increase in our defence spending. That is the difference that a Labour Government makes.”
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Despite the Prime Minister’s reluctance to reaffirm the commitment, the Chancellor is expected to maintain her existing fiscal strategy. The government’s priority remains stabilising the economy while avoiding drastic tax measures that could stifle growth.
The decision not to adjust taxes will likely be welcomed by businesses and households grappling with economic uncertainty. Yet, critics argue that without changes to taxation or spending, the government may struggle to meet its fiscal targets.
The spring statement will also be closely scrutinised for potential measures to support economic recovery. With inflationary pressures still lingering and borrowing costs higher than anticipated, Ms Reeves faces a delicate balancing act in steering the UK’s finances.
As the political debate over taxation continues, attention will turn to the government’s long-term fiscal plans and how they align with its commitments to economic stability, public services, and growth.
