Tories Claim Extending Tax Threshold Freeze Violates Labour Manifesto

The Conservative Party is asserting that the proposed extension of the tax threshold freeze by the Labour government violates its manifesto commitments. Mel Stride, the shadow chancellor, expressed concerns at a recent press conference in London. He referred to the freeze on income tax thresholds as a “stealth tax” that imposes undue financial burdens on working families.

Implications of the Tax Threshold Freeze

Labour’s manifesto promised not to increase taxes on working individuals, including national insurance, income tax, and VAT. Despite this, the Labour government has been criticized for its approach to national insurance, as it raised employer contributions while claiming its promise applied only to employees.

If Labour extends the freeze on tax thresholds, it would not technically breach the manifesto but would result in higher tax liabilities for many. This freeze, initially enacted by the previous Conservative administration due to the pandemic, is set to expire in 2028. However, Chancellor Rachel Reeves may implement a two-year extension, projecting an additional £8 billion in revenue to address a £30 billion deficit in public finances.

Projected Financial Impact

Stride predicted that the tax freeze might cost some families up to £1,300 over the two-year period and increase their annual tax payments by approximately £900. Kemi Badenoch, the Conservative leader, criticized Labour’s plans, suggesting they were designed to fund increased welfare benefits and quiet dissent within their ranks.

• Badenoch labeled the freeze extension a means to finance potential changes to the two-child benefit cap.
• Scrapping this cap could add roughly £3.5 billion to government expenditures.
• Badenoch warned that the introduction of higher welfare spending would inevitably lead to increased taxes.

“Nobody voted for this,” Badenoch stated, emphasizing her belief that a future Conservative government would reinstate the two-child benefit cap to ensure equal financial decision-making for those on benefits.

Alternative Proposals and Political Reactions

Meanwhile, Nigel Farage, the leader of Reform UK, has suggested that substantial savings could be found by targeting foreign nationals residing in the UK. His plan includes limiting Universal Credit to British citizens, increasing the immigration health surcharge, and reforming personal independence payments.

Labour Party Chair Anna Turley criticized both the Conservative and Reform UK plans as unrealistic and potentially harmful to the UK economy. She argued that such proposals would escalate costs for consumers and reverse the progress made by Labour in reducing prices through international trade agreements.

Turley expressed concerns regarding severe budget cuts proposed by Badenoch, warning that essential services like hospitals, schools, and police would suffer as a result. She repeated the sentiment that families are already facing difficulties due to the past financial decisions made by the Conservatives.