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Sticking to Labour’s manifesto pledge and freezing income tax thresholds rather than raising income tax has hurt low- and middle-income earners, an influential thinktank has said.

Millions of these workers “would have been better off with their tax rates rising than their thresholds being frozen”, according to the Resolution Foundation’s chief executive, Ruth Curtice.

“Ironically, sticking to her manifesto tax pledge has cost millions of low-to-middle earners”, she said.

Chancellor Rachel Reeves announced in her budget speech that the point at which people start paying higher rates of tax has been held. It means earners are set to be dragged into higher tax bands as they get pay rises.

The chancellor felt unable to raise income tax as the Labour Party pledged not to raise taxes on working people in its election manifesto.

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Budget: What does the public think?

But many are saying that pledge was broken regardless, as the tax burden has increased by £26bn in this budget.

When asked by Sky News whether Ms Reeves would accept she broke the manifesto pledge, she said on Thursday: “I do recognise that yesterday I have asked working people to contribute a bit more by freezing those thresholds for a further three years from 2028.”

More on Budget 2025

“I do recognise that that will mean that working people pay a bit more, but I’ve kept that contribution to an absolute minimum”.

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Budget tax calculator: How much more will you pay?

As a result of the freeze in income tax bands, another closely watched thinktank, the Institute for Fiscal Studies (IFS), said a basic-rate taxpayer will pay £220 more tax per year, while a higher-rate taxpayer will be charged £600 more annually.

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The Resolution Foundation thinktank, which aims to raise living standards, welcomed measures designed to support people with the cost of living, such as the removal of the two-child benefit cap, which limited the number of children families could claim benefits for.

The announced reduction in energy bills through the removal of as yet unspecified levies was similarly welcomed.

The chancellor said bills would become £150 cheaper a year, but the foundation said typical energy bills will fall by around £130 annually for the next three years, “though support then fades away”.

Credit was also given to Ms Reeves for increasing the financial cushion she has against market shocks, like a spike in energy prices.

This is part of her self-imposed fiscal rules to bring down debt and balance the budget by 2030.

As a result, less policy speculation and more stability can be expected.

“The decision to increase her headroom, when she didn’t strictly need to, deserves credit,” said economics research institute, the IFS.

“It means that it will require a larger shock to blow the chancellor off course. This in turn should mean that we can expect a period of greater stability and more muted policy speculation.”

More money, however, will be borrowed as a result of the budget, said independent forecasters, the Office for Budget Responsibility (OBR).

Budget spending and tax policies increase borrowing by an average of £5bn over the next three years, but then reduces it by roughly £13bn in the following two.

More to come

This budget won’t be the last of it, the Resolution Foundation’s Ms Curtice said, as economic growth forecasts have been downgraded by the OBR, and growth is a “hurdle that remains to be cleared”.

“Until that challenge is taken on, we can expect plenty more bracing budgets,” she added.

It comes despite Ms Reeves saying as far back as last year, there would be no more tax increases.

Ultimately, though, the foundation said: “The great drumbeat of doom that preceded the chancellor’s big day turned out to be over the top: the forecasts came in better than many had feared.”

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Labour accused of another manifesto breach after major workers’ rights U-turn

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Labour accused of another manifesto breach after major workers' rights U-turn

The Labour government is facing accusations of two manifesto breaches in as many days after turning its back on a promise to protect workers from unfair dismissal from day one in a job.

A day after Rachel Reeves confirmed an extended freeze on income tax thresholds that critics said amounted to a manifesto-breaching tax hike on working people, the business secretary announced a key measure in the flagship Employment Rights Bill would be watered down.

The qualifying period for unfair dismissal is currently two years, and Labour said in their manifesto they would bring it down to one day.

But Peter Kyle announced on Thursday it would now be six months, having faced opposition from businesses.

Mr Kyle defended the change, insisting “compromise is strength”, but Tory leader Kemi Badenoch described it as “another humiliating U-turn” and a number of Labour MPs aren’t happy.

Andy McDonald, MP for Middlesbrough and Thornaby East, branded the move a “complete betrayal”, while Poole MP Neil Duncan-Jordan said the government had “capitulated”.

Former employment minister Justin Madders, who was sacked in Sir Keir Starmer’s reshuffle earlier this year, also disputed claims the move did not amount to a manifesto breach.

“It might be a compromise,” he said, “but it most definitely is a manifesto breach.”

What did the manifesto say?

The Employment Rights Bill was a cornerstone of Labour’s 2024 election manifesto, and also contains measures that would ban zero-hours contracts.

The party manifesto promised to “consult fully with businesses, workers, and civil society on how to put our plans into practice before legislation is passed”.

“This will include banning exploitative zero-hours contracts; ending fire and rehire; and introducing basic rights from day one to parental leave, sick pay, and protection from unfair dismissal,” it said.

Angela Rayner was a key driver of the bill before she left cabinet, but Peter Kyle (below) is now calling the shots. Pic: PA
Image:
Angela Rayner was a key driver of the bill before she left cabinet, but Peter Kyle (below) is now calling the shots. Pic: PA

Pic: Reuters
Image:
Pic: Reuters

How did we get here?

But the legislation – which was spearheaded by former deputy prime minister Angela Rayner – has been caught in parliamentary ping pong with the House of Lords.

Last month, some peers objected to the provisions around unfair dismissal, suggesting they would deter some businesses from hiring.

They also opposed Labour’s move to force employers to offer guaranteed hours to employees from day one, arguing zero-hour contracts suited some people.

Ministers said reducing the qualifying period for unfair dismissal turned the bill into a “workable package”.

Read more:
Budget 2025: The key points at a glance
Starmer insists Labour ‘kept to our manifesto’

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Employment Rights Bill is ‘anti-growth blueprint’

Businesses have largely welcomed the change, but unions gave a more hostile response.

Sharon Graham, the general secretary of Unite, said the bill was now a “shell of its former self”.

“With fire and rehire and zero-hours contracts not being banned, the bill is already unrecognisable,” she said.

The TUC urged the House of Lords to allow the rest of the legislation to pass.

Paul Nowak, the general secretary, said: “The absolute priority now is to get these rights – like day one sick pay – on the statute book so that working people can start benefitting from them from next April.”

‘Strikes the right balance’

The Resolution Foundation said the change in the unfair dismissal period was a “sensible move that will speed up the delivery of improvements to working conditions and reduce the risk of firms being put off hiring”.

It said the change “strikes the right balance between strengthening worker protections and encouraging businesses to hire” and deliver “tangible improvements to working conditions”.

The Confederation of British Industry (CBI) added: “Businesses will be relieved that the government has agreed to a key amendment to the Employment Rights Bill, which can pave the way to its initial acceptance.

“This agreement keeps a qualifying period that is simple, meaningful and understood within existing legislation.

“It is crucial for businesses confidence to hire and to support employment, at the same time as protecting workers.”

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Budget 2025: Reeves urged to ‘make the case’ for income tax freeze – as PM hits out at defenders of ‘failed’ policy

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Budget 2025: Reeves urged to 'make the case' for income tax freeze - as PM hits out at defenders of 'failed' policy

Rachel Reeves needs to “make the case” to voters that extending the freeze on personal income thresholds was the “fairest” way to increase taxes, Baroness Harriet Harman has said.

Speaking to Sky News political editor Beth Rigby on the Electoral Dysfunction podcast, the Labour peer said the chancellor needed to explain that her decision would “protect people’s cost of living if they’re on low incomes”.

In her budget on Wednesday, Ms Reeves extended the freeze on income tax thresholds – introduced by the Conservatives in 2021 and due to expire in 2028 – by three years.

The move – described by critics as a “stealth tax” – is estimated to raise £8bn for the exchequer in 2029-2030 by dragging some 1.7 million people into a higher tax band as their pay goes up.

Rachel Reeves, pictured the day after delivering the budget. Pic: PA
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Rachel Reeves, pictured the day after delivering the budget. Pic: PA

The chancellor previously said she would not freeze thresholds as it would “hurt working people” – prompting accusations she has broken the trust of voters.

During the general election campaign, Labour promised not to increase VAT, national insurance or income tax rates.

Sir Keir Starmer has insisted there’s been no manifesto breach, but acknowledged people were being asked to “contribute” to protect public services.

He has also launched a staunch defence of the government’s decision to scrap the two-child benefit cap, with its estimated cost of around £3bn by the end of this parliament.

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Prime minister defends budget

‘A moral failure’

The prime minister condemned the Conservative policy as a “failed social experiment” and said those who defend it stand for “a moral failure and an economic disaster”.

“The record highs of child poverty in this country aren’t just numbers on a spreadsheet – they mean millions of children are going to bed hungry, falling behind at school, and growing up believing that a better future is out of reach despite their parents doing everything right,” he said.

The two-child limit restricts child tax credit and universal credit to the first two children in most households.

The government believes lifting the limit will pull 450,000 children out of poverty, which it argues will ultimately help reduce costs by preventing knock-on issues like dependency on welfare – and help people find jobs.

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Budget winners and losers

Speaking to Rigby, Baroness Harman said Ms Reeves now needed to convince “the woman on the doorstep” of why she’s raised taxes in the way that she has.

“I think Rachel really answered it very, very clearly when she said, ‘well, actually, we haven’t broken the manifesto because the manifesto was about rates’.

“And you remember there was a big kerfuffle before the budget about whether they would increase the rate of income tax or the rate of national insurance, and they backed off that because that would have been a breach of the manifesto.

“But she has had to increase the tax take, and she’s done it by increasing by freezing the thresholds, which she says she didn’t want to do. But she’s tried to do it with the fairest possible way, with counterbalancing support for people on low incomes.”

Read more:
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Budget 2025 is a big risk for Labour’s election plans

She added: “And that is the argument that’s now got to be had with the public. The Labour members of parliament are happy about it. The markets essentially are happy about it. But she needs to make the case, and everybody in the government is going to need to make the case about it.

“This was a difficult thing to do, but it’s been done in the fairest possible way, and it’s for the good, because it will protect people’s cost of living if they’re on low incomes.”

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Prostate cancer: NHS screening programme could come one step closer today

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Prostate cancer: NHS screening programme could come one step closer today

An NHS screening programme for prostate cancer could come one step closer if it’s backed today by a key committee that advises the government.

The National Screening Committee, comprised of doctors and economists, will reveal whether it now believes the benefits of screening outweigh any risks, and whether testing could be done at a reasonable cost to the NHS.

When it last looked at the evidence in 2020, it rejected calls for screening, even though prostate cancer kills 12,000 men a year.

But in recent months, there has been growing pressure for screening from high-profile public figures such as Olympian Sir Chris Hoy and former Sky News presenter Dermot Murnaghan.

Both have been diagnosed with advanced prostate cancer, yet the disease is curable if detected in its early stages.

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Sir Chris Hoy and Dermot Murnaghan on facing cancer

Former prime minister David Cameron has also backed the campaign for screening this week after revealing he had been treated for the cancer.

The committee will decide whether new research has tipped the scales in favour of screening older men, or whether to target only those at higher risk, such as black men and those with a family history of the disease.

The case for…

Lithuania is currently the only country to screen all men aged 50-69 with a blood test for PSA, a protein released by prostate cells.

A low level is normal. But levels can rise steeply in men with cancer.

A recent study showed that regular PSA testing of men over 50 could reduce deaths by 13%.

That’s about the same survival benefit of breast screening.

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Cameron treated for prostate cancer

…and the case against

But the PSA blood test isn’t completely reliable.

One in seven men with prostate cancer actually have a normal PSA level.

And even those with a high level may have a cancer that is so slow growing that it’s just not a threat.

That’s why the National Screening Committee has warned in the past that PSA screening could lead men to have surgery or other treatment that they don’t actually need. Treatment can result in incontinence or impotence.

But the evidence has moved on.

These days men with a high PSA should have an MRI scan of their prostate, which significantly reduces the risk of unnecessary treatment. And the treatment itself is getting safer.

But the committee may judge that the risks and benefits of screening all men in their 50s and 60s are still too finely balanced to give the go-ahead.

They may wait for results from the Transform trial, which has just been launched and will compare different screening strategies. That could take many years.

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‘When I was diagnosed, it was too late’

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But campaigners are hopeful that the committee will recommend the screening of men at higher risk of prostate cancer in the meantime.

Black men have twice the risk of those from other ethnic groups.

Men whose father or brothers have had prostate cancer are two and a half times the risk.

And there is also an increased risk for men whose mother or sisters have had breast or ovarian cancer.

Roughly 1.3 million men fall into one of the risk groups.

But identifying and inviting them for screening could prove tricky. GPs don’t always note a patient’s ethnicity in their medical records, and they would usually only know about a patient’s family history if they have been told.

If the committee recommends screening in some form, it is likely to go out to a public consultation before landing on the desk of Health Secretary Wes Streeting for a final decision.

Ultimately, it is his call whether at least some men are screened for what is now the most common cancer in England.

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