"If Keir Starmer's election campaign was carrying a ming vase across an ice rink, then this budget according to one minister is like wrestling a squirrel across a minefield. It is an allusion to the biggest risk for Rachel Reeves, not the markets or big business, but Labour MPs. It was those MPs who were the key audience for the chancellor's highly unusual speech preparing the ground for possible income tax rises."
"Downing Street insiders are talking openly about an imminent rise in income tax. You don't exactly have to be a genius to have worked out we're doing it, one said. MPs are being buttered up with breakfasts in No 10 and professors and thinktank veterans are giving private lessons in Economics 101. Reeves has been seeing small groups by region, mostly as a listening exercise. For a government with such a large majority, it would seem extraordinary to be so concerned about a parliamentary backlash."
"But the parliamentary Labour party has tasted power at the welfare vote. It's colleagues who are having the most impact on the way the markets move, one minister closely involved with the budget preparations said. Whether it's the two-child benefit cap or the mayor of Greater Manchester saying never mind the bond markets, it literally adds to our borrowing costs."
Labour is preparing for possible income tax increases while working to avoid a parliamentary backlash from its own MPs. Downing Street is openly briefing insiders and arranging pre-budget sessions, breakfasts and expert briefings to persuade and educate MPs. Rachel Reeves is holding regional small-group meetings largely as listening exercises. Ministers fear that internal dissent, especially over welfare votes, can move markets and raise borrowing costs. The government, despite a large majority, is determined not to be caught off-guard if it breaks a manifesto pledge and seeks to raise income tax.
Read at www.theguardian.com
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