Rachel Reeves’ Halloween Budget will haunt her and break trust with millions of workers if she hikes key tax

“TRUST matters in politics,” Philip Hammond wrote on this very page in March 2017.

The then Chancellor had just been forced into a humiliating U-turn after attempting a Budget raid on National Insurance contributions.

“Since the Budget last week,” he wrote, “Sun readers, members of the public and others have questioned whether the planned increase in National Insurance for the self-employed is consistent with the tax pledges in our last manifesto.”

The public outcry and support for our “White Van Scam” campaign would suggest it was not, despite Tory insistence that their 2015 manifesto was only referencing the main rate of NI.

But hamstrung Hammond knew the game was up, conceding: “It’s not enough simply to stay within the letter of our tax lock law.

“It’s important that we meet the spirit of our commitment as well.”

Sound familiar yet?

Pulled the plug

Back then, Labour were quick to twist the knife, with then backbencher Yvette Cooper hitting out: “Did they not actually read their own manifesto?”

And one Rachel Reeves branded it an “extra-ordinary U-turn after a shoddy Budget”.

Eventually it was No10 that pulled the plug on Hammond’s headline measure, kneecapping their neighbour in No11 and souring his relationship with PM Theresa May forever.

She planned to sack him, and would have had the blowback not engulfed her, too.

Despite the furore, May was in her pomp, and a few weeks later would call her disastrous election that almost handed power to the old bearded Commie Corbyn.

The warnings from history could not be clearer; the public do not like to be taken for fools and no amount of linguistic jiggery-pokery will save you if they think you are insulting their intelligence.

Oh, and No10 back their Chancellors . . . until they don’t.

Despite her unenviable task next week, I think Rachel Reeves is making a very dangerous mistake in her insistence that Labour’s very blunt manifesto pledge that “we will not increase National Insurance” was only ever meant to be about employees.

A mealy-mouthed mention that “Labour will not increase taxes on working people” is exactly the sort of “spirit of our commitment” that caught Hammond out.

And it’s going to be a double blow if she extends the freeze on income tax thresholds.

Good luck explaining how dragging millions more low-paid workers into the tax on wages is not “increasing taxes on working people”.

And all the indicators suggest the public are paying attention and do not like what they are hearing.

According to pollsters Opinium, Labour has already squandered a 15-point lead on “being the best party to improve the public’s financial situation”, now just one point behind the Conservatives.

What’s worse is Labour know they are playing with fire.

AFP

Wes Streeting’s health department will be the only one to win cash from the Treasury on October 30[/caption]

Alamy

Reeves could soften the NICs betrayal by sparing bosses from a direct £18billion raid on employers’ contributions[/caption]

Wes Streeting, whose health department will be the only one to win cash from the Treasury on October 30, despite a backlash led by Deputy PM Angie Rayner, was on the airwaves yesterday already dancing on the head of a very dangerous pin.

He told the BBC: “All of the measures in the manifesto were fully costed, fully funded, promises we could keep. And we were disciplined in that process because we know that if there’s one thing that’s in even shorter supply than money at the moment, it’s trust in politics”.

But he added: “We did not anticipate it being as bad.”

Trust, once out of the genie’s lamp, is almost impossible to regain. Just ask Nick Clegg about breaking his manifesto vow on tuition fees for an idea of how the “we didn’t realise it was this bad” excuse lands.

The Chancellor insists she will throw a “ring of steel” around working people in this Budget, protecting them from the worst mega tax hikes on inheritance, stamp duty and sales of stock and shares.

Bigger betrayal

It seems Reeves could soften the NICs betrayal by sparing bosses from a direct £18billion raid on employers’ contributions, instead eyeing a £9billion hit by applying NICs to employers’ pension contributions. 

Yet I still argue it’s a huge gamble to hope that complexity will fudge the promise that “we will not increase National Insurance”.

But nowhere would there be a bigger betrayal of working people than a hike in fuel duty.

Opinium shows almost half of voters say the punishment at the pumps is too high, compared to just one in five who say it’s about right.

Compare that to 28 per cent who think National Insurance is too high, and 42 per cent who say it’s about right.

FairFuelUK surveys show that 70 per cent of journeys are drivers using their cars to get to work.

The quickest and easiest way to break trust with millions of workers is right there.

Careful Chancellor, you don’t want to have to do a Hammond.

But you can’t say you were not warned.