Sir Keir Starmer has insisted Labour “kept to our manifesto” promises despite raising taxes in the budget – as he asked “everybody to contribute”.

The morning after the chancellor announced her record-breaking tax-raising budget, the prime minister told Sky News political editor Beth Rigby the government had “done the least possible we can” to impact people and had “done it in a fair way”.

He said it was “not true” his government has misled the public after promising not to raise taxes again after last year’s budget.

And he refused multiple times to say he had broken his manifesto promise not to raise income tax, national insurance or VAT “on working people”.

“We kept to our manifesto in terms of what we’ve promised,” he said.

“But I accept the challenge that we’ve asked everybody to contribute. I want to be really clear on why we’ve done that,” Sir Keir continued.

“That is because we need to protect our NHS, to make sure that it’s there for people when they need it and their families when they need it.

“Secondly, to make sure we’ve got the money to put into our schools. So every single child can go as far as their talent will take them,” the prime minister added.

“And the third thing is to bear down on the cost of living.”

Politics latest: Reeves says people will pay more

The chancellor announced her budget on Wednesday, just under an hour after the Office for Budget Responsibility (OBR) accidentally uploaded its entire report early, revealing just what would be in the announcement.

She confirmed 43 tax increases to raise an extra £26bn, bringing taxes to an all-time high.

One of the largest tax hikes was the extension to the freeze in income tax thresholds by three years until 2031 to raise £8.3bn more by the end of the decade.

Tax calculator: Find how much more you will pay due to thresholds freeze

But Ms Reeves also insisted this was not a betrayal of Labour’s manifesto promise.

She admitted to Sky News political editor Beth Rigby she is “asking ordinary people to pay a little bit more” but said the manifesto promise was “very specific”.

Read more:
The main budget announcements
Sticking to Labour manifesto pledge costs millions of workers

The chancellor also announced:

• Pensions contributions via salary sacrifice will be capped in 2029 at £2,000 a year before national insurance applies, raising £4.7bn
• The cash ISA allowance will be cut from £20,000 to £12,000 in 2017 for under 65s
• A mansion tax of £2,500 on properties worth more than £2m up to £7,500 for over £5m homes
• Basic and new state pension rates increased by 4.8%
• Pay-per-mile tax for electric vehicles from April 2028
• Tax rates on property savings and dividend income increased by two percentage points
• Two-child benefit cap lifted from April 2026
• Fuel duty frozen until next September
• £150 cuts to average household energy bill from April
• Inheritance tax change to allow transfer of 100% relief allowance to a spouse when one dies.

Over and over again, in the run-up to the election and beyond, the prime minister and the chancellor told voters they would not put up taxes on working people – that their manifesto plans for government were fully costed and, with the tax burden at a 70-year high, they were not in the business of raising more taxes.

On Wednesday the chancellor broke those pledges as she lifted taxes by another £26bn, adding to the £40bn rise in her first budget.

She told working people a year ago she would not extend freezing tax thresholds – a Conservative policy – because it would “hurt working people”.

Budget latest: ‘It can only lead to the death of us at the general election’

On Wednesday she ripped up that pledge, as she extended the threshold freeze for three years, dragging 800,000 workers into tax and another million into the higher tax band to raise £8.3bn.

Rachel Reeves said it was a Labour budget and she’s right.

In the first 17 months of this government, Labour have raised tens of billions in taxes, while reversing on welfare reform – the U-turn on the winter fuel allowance and disability benefits has cost £6.6bn.

Ms Reeves even lifted the two-child benefit cap on Wednesday, at a cost of £3bn, despite the prime minister making a point of not putting that pledge in the manifesto as part of the “hard choices” this government would make to try to bear down on the tax burden for ordinary people. The OBR predicts one in four people would be caught by the 40% higher rate of tax by the end of this parliament.

Those higher taxes were necessary for two reasons and aimed at two audiences – the markets and the Labour Party.

For the former, the tax rises help the chancellor meet her fiscal rules, which requires the day-to-day spending budget to be in a surplus by 2029-30.

Before this budget, her headroom was just £9.9bn, which made her vulnerable to external shocks, rises in the cost of borrowing or lower tax takes. Now she has built her buffer to £22bn, which has pleased the markets and should mean investors begin to charge Britain less to borrow.

As for the latter, this was also the chancellor raising taxes to pay for spending and it pleased her backbenchers – when I saw some on the PM’s team going into Downing Street in the early evening, they looked pretty pleased.

I can see why: amid all the talk of leadership challenge, this was a budget that helped buy some time.

“This is a budget for self-preservation, not for the country,” remarked one cabinet minister to me this week.

You can see why: ducking welfare reform, lifting the two-child benefit cap – these are decisions a year-and-a-half into government that Downing Street has been forced into by a mutinous bunch of MPs.

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With a majority of 400 MPs, you might expect the PM and his chancellor to take the tough decisions and be on the front foot. Instead they find themselves just trying to survive, preserve their administration and try to lead from a defensive crouch.

When I asked the chancellor about breaking manifesto promises to raise taxes on working people, she argued the pledge explicitly involved rates of income tax (despite her pledge not to extend the threshold freeze in the last budget because it “hurt working people”).

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Budget 2025: The key points at a glance
Why Labour MPs may like Reeves’s budget

Trying to argue it is not a technical breach – the Institute of Fiscal Studies disagreed – rather than taking it on and explaining those decisions to the country says a lot about the mindset of this administration.

One of the main questions that struck me reflecting on this budget is accountability to the voters.

Labour in opposition, and then in government, didn’t tell anyone they might do this, and actually went further than that – explicitly saying they wouldn’t. They were asked, again and again during the election, for tax honesty. The prime minister told me that he’d fund public spending through growth and had “no plans” to raise taxes on working people.

Those people have been let down. Labour voters are predominantly middle earners and higher earning, educated middle classes – and it is these people who are the ones who will be hit by these tax rises that have been driven to pay for welfare spending rather than that much mooted black hole (tax receipts were much better than expected).

This budget is also back-loaded – a spend-now-pay-later budget, as the IFS put it, with tax rises coming a year before the election. Perhaps Rachel Reeves is hoping again something might turn up – her downgraded growth forecasts suggests it won’t.

This budget does probably buy the prime minister and his chancellor more time. But as for credibility, that might not be recoverable. This administration was meant to change the country. Many will be looking at the tax rises and thinking it’s the same old Labour.

Hitchin in Hertfordshire does well in the polls.

On the edge of the Chilterns and 30 minutes from central London by train, it’s Britain’s most expensive market town for first-time buyers. It’s also been voted one of the top 10 best, and top 20 happiest, places to live in the country.

Last summer Labour did well in the polls here too. Hitchin’s 35,000 inhabitants, with above average earnings, levels of employment, and higher education, ejected the Conservatives for the first time in more than 50 years.

Money latest: What the budget means for your money

Having swept into affluent southern constituencies, Rachel Reeves is now asking them to help pay for her plans via a combination of increased taxes on earnings and savings.

While her first budget made business bear the brunt of tax rises, the higher earners of Hitchin, and those aspiring to join them, are unapologetically in the sights of the second.

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Kai Walker, 27, runs Vantage Plumbing & Heating, a growing business employing seven engineers, all earning north of £45,000, with ambition to expand further.

He’s disappointed that the VAT threshold was not reduced – “it makes us 20% less competitive than smaller players” – and does not love the prospect of his fiancee paying per-mile to use her EV.

But it’s the freeze on income tax thresholds that will hit him and his employees hardest, inevitably dragging some into the 40% bracket, and taking more from those already there.

“It seems like the same thing year on end,” he says. “Work harder, pay more tax, the thresholds have been frozen again until 2031, so it’s just a case where we see less of our money. Tax the rich has been a thing for a while or, you know, but I still don’t think that it’s fair.

“I think with a lot of us working class, it’s just a case of dealing with the cost. Obviously, we hope for change and lower taxes and stuff, but ultimately it’s a case of we do what we’re told.”

Reeves’s central pitch is that taxes need to rise to reset the public finances, support the NHS, and fund welfare increases she had promised to cut.

In Hitchin’s Market Square it has been heard, but it is strikingly hard to find people who think this budget was for them.

Jamie and Adele Hughes both work, had their first child three weeks ago, and are unconvinced.

“We’re going to be paying more, while other people are going to be getting more money and they’re not going to be working. I don’t think it’s fair,” says Adele.

Jamie adds: “If you’re from a generation where you’re trying to do well for yourself, trying to do things which were once possible for everybody, which are not possible for everybody now, like buying a house, starting a family like we just have, it’s extremely difficult,” says Jamie.

Liz Felstead, managing director of recruitment company Essential Results, fears the increase in the minimum wage will hit young people’s prospects hard.

“It’s disincentivising employers to hire younger people. If you have a choice between someone with five years experience or someone with none, and it’s only £2,000 difference, you are going to choose the experience.”

Read more:
Budget takes UK into uncharted territory to allow spending spree
Main budget announcements at a glance
Reeves reveals £26bn of tax rises
Cash ISA limit slashed – but some are exempt

After five years, the cost of living crisis has not entirely passed Hitchin by. In the market Kim’s World of Toys sells immaculately reconditioned and repackaged toys at a fraction of the price.

Demand belies Hitchin’s reputation. “The way that it was received was a surprise to us I think, particularly because it’s a predominantly affluent area,” says Kim. “We weren’t sure whether that would work but actually the opposite was true. Some of the affluent people are struggling as well as those on lower incomes.”

Customer Joanne Levy, shopping for grandchildren, urges more compassion for those who will benefit from Reeves’s spending plans: “The elderly, they’re struggling, bless them, the sick, people with young children, they are all struggling, even if they’re working they are struggling.”