Rachel Reeves denied breaking Labour’s manifesto tax pledge during a post-Budget grilling. The Chancellor extended the freeze on income tax thresholds for another three years in her statement.

Labour promised in the run up to the 2024 general election not to raise taxes on working people, ruling out an increase in national insurance, the basic, higher or additional rates of income tax, and VAT. But Ms Reeves denied she had breached the promise when asked by Sky’s political editor Beth Rigby “how in good conscience can you stay on in your job”.

The Chancellor said: “In the manifesto, we were very clear it was the rates of income tax, National Insurance and VAT.

“But I’m not going to get into semantics. I recognise that we are asking people to contribute more by freezing those allowances.

“They were already frozen by the previous government from 2021-28, and we’re freezing them for a further three years.

“I do recognise that I was asking ordinary people to pay a little bit more, but I’ve managed to keep that contribution as low as I possibly can by closing loopholes and asking those with the broadest shoulders to pay more.”

The Institute for Fiscal Studies (IFS) said the move had broken Labour’s manifesto commitment on taxes.

The Chancellor has “found a way to cobble together a sizeable package without increasing the main rates of national insurance contributions, VAT or income tax”, it said.

But the think tank added: “Because it includes a freeze in national insurance thresholds, it also breaches the Government’s manifesto tax promise not to increase national insurance – as does the cap on salary sacrifice.

“And, as the Chancellor acknowledged, it clearly represents a tax rise on working people.”