Sir Keir Starmer is clear that Labour will stick to its manifesto pledges on tax.
But will the new Government do so?
That may be a matter of opinion.
Capital gains tax may also rise, there has been speculation of changes to inheritance tax, and annual council tax increases of five per cent could continue despite inflation falling to around two per cent.
The Prime Minister on Tuesday declined to rule out increasing employers’ National Insurance contributions but insisted the Government would keep its manifesto promises.
Sir Keir told the BBC: “We were very clear in the manifesto that we wouldn’t be increasing tax on working people and we expressly said that that was income tax, that was NICs etc.”
He added: “It wasn’t just the manifesto, we said it repeatedly in the campaign and we intend to keep the promises that we made in our manifesto.
“So I’m not going to reveal to you the details of the Budget, you know that that’s not possible at this stage.
“What I will say is where we made promises in our manifesto, we will be keeping those promises.”
But shadow Treasury minister Laura Trott is adamant: "Regardless of what they say, it's obvious to all that hiking employer National Insurance is a clear breach of Labour's manifesto.”
Such a view would be expected of the Opposition.
However, Paul Johnson, director of the Institute for Fiscal Studies is also very clear in his mind that increasing National Insurance on employers would be a breach of Labour’s manifesto.
He said: “It seems to me that would be a straightforward breach of a manifesto commitment.
“I went back and read the manifesto and it says very clearly ‘We will not raise rates of national insurance.’ It doesn’t specify employee national insurance.”
So, what does the manifesto actually say.
It states: “We will ensure taxes on working people are kept as low as possible. Labour will not increase taxes on working people, which is why we will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT.”
Patrick Diamond, Professor of Public Policy and Director of the Mile End Institute, School of Politics and International Relations at Queen Mary, University of London, believes the Government has a “plausible case” that an NI hike on employers would not break the manifesto.
He said: “The 2024 Labour manifesto explicitly states: We will ensure taxes on working people are kept as low as possible.
“Ministers will argue that if the Treasury does increase the NI rate paid by employers or reduces tax relief on pension contributions, that is not a breach of the manifesto. They have a plausible case,” he added, while being open that he is a former Labour special adviser.
Raising NI on employers could rake in some £16 billion for the Treasury, far more than changes to some other taxes, as the new Government seeks to fix the public finances.
Which leaves open another question.
Did Labour write the manifesto to give the impression that any rise in NI, as well as income tax and VAT, had been ruled out ahead of the July 4 General Election, while leaving enough wiggle room to do an NI hike on employers once in power?
