Labour warns against immediately raising taxes in Budget

Shadow chancellor Anneliese Dodds arriving at BBC Broadcasting House in central London - Credit: PA

Labour has warned Rishi Sunak against immediately raising taxes in his Budget on Wednesday, urging him instead to focus on securing the economic recovery.

Shadow chancellor Anneliese Dodds said now is “not the time” for tax rises, but signalled that she could support an increase in corporation tax in the future.

Her comments came amid a split in the party over the mooted plan, after reports suggested the chancellor is considering raising corporation tax to as much as 25% from 19%.

Some Labour MPs have questioned whether the party should be backing the increase, arguing that it is a progressive tax.

Dodds was asked after a Bloomberg speech in London on Monday whether she would vote against an increase in corporation tax in the short term, or if she would support a longer-term package.

She said that over the last 10 years “Conservative-led governments have pulled the UK further and further away from the average corporation tax level of OECD nations”.

She added: “That hasn’t boosted investment in the UK. We have not seen it growing actually in the speed that it has in many other countries when it comes to private sector investment.

“So we would look with interest at any longer term plan that the Conservatives might set out to deal with that issue, especially if we also see action taken towards business rates…

“But should the chancellor be focused on particularly imposing additional tax rises right now?

“Well, we don’t believe that he should be focused on that. He really should be focused on securing the recovery.

“Now is not the time for immediate tax rises – it is the time for a chancellor focused on jobs and securing our recovery.”

Dodds used her speech ahead of the Budget to urge Sunak against hitting families with a “triple hammer blow” of council tax rises, social security cuts and pay freezes.

She said: “Families across the country have sacrificed so much throughout this crisis, and yet Rishi Sunak’s reward is to hit them with a triple hammer blow of council tax rises, social security cuts and pay freezes.

“The chancellor’s message to our key workers – our teachers, our police officers, our armed forces personnel – at the end of one of the hardest years in living memory is to say you deserve a real-terms pay cut.

“That is spectacularly unjust. It’s also economically illiterate. If you take money out of people’s pockets, they’ll tighten their belts and spend less. Our high-street shops and small businesses will have fewer customers.

“The economy will take longer to recover, more businesses will fail and more jobs will be lost.

“From the IMF and the World Bank to the OECD, every major international economic organisation is in agreement: now is not the time for tax rises on struggling businesses or families.

“In private, it seems Rishi Sunak is clear about his rationale for this: to get tax rises out of the way now, well ahead of the next general election. In other words, a chancellor who is putting the interests of the Conservative Party ahead of those of the country.”