Rachel Reeves has said that “main taxes on working people” will not rise in the Budget.
She gave the reassurance a week before she delivers her first Budget, and the first by a woman Chancellor.
But her words left the door open to a raft of other tax rises, many of which could hit London hard.
Labour promised in its manifesto that there would not be tax rises on VAT, income tax and National Insurance rates, which Sir Keir Starmer has sought to caveat as a pledge applying to “working people”.
Speaking to BBC radio, Ms Reeves said: “We said that because working people had already paid the burden under the last government, we wouldn’t increase the taxes, the main taxes that working people pay, so income tax - all rates - national insurance and VAT.
“So those taxes that working people pay, we’re not increasing those taxes in the Budget.”
However, the Chancellor appears set to increase National Insurance on employers, to freeze the thresholds for paying income tax for another two years, to hike capital gains tax and inheritance tax and to make changes to stamp duty.
She also demanded that Cabinet colleagues find billions of pounds of Whitehall savings as she seeks to find a package of £40 billion, mainly from tax rises.
This would be used to address an alleged £22 billion black hole in the public finances which she claims was left by the Tories, which they deny, and also for investing billions in the new Government’s priorities such as the NHS.
Ms Reeves said she is “sympathetic towards the mess” her Cabinet colleagues have faced, after it was reported that some had gone directly to Sir Keir and No10 over their concerns about possible cuts to their departments that could come at next week’s Budget.
Ms Reeves said it is “perfectly reasonable” that ministers “set out their case” to Number 10 and Number 11 ahead of the fiscal event, and warned problems cannot “just be magicked away”.
She said she had reached spending settlements with all government departments ahead of the Budget.
She added: “I’m very sympathetic towards the mess that my colleagues have inherited. I understand those challenges, but also my colleagues understand the challenges that we face as a government in making sure that the sums add up.
“It is perfectly reasonable that Cabinet colleagues set out their case, both to me as Chancellor and to the Prime Minister, about the scale of the challenges that they find in their departments. It’s been a really constructive process.”
There has been mixed news for the UK economy in recent days.
Figures from the Office for National Statistics revealed Government borrowing for the financial year so far had hit £80 billion.
Meanwhile, the International Monetary Fund suggested the UK economy is set to grow faster than previously thought in 2024.
The organisation said UK GDP is due to grow by 1.1% in 2024, compared to a forecast of 0.7 per cent in July.
