Second think tank urges Reeves to break manifesto vows and raise taxes this autumn

A second think tank has urged Chancellor Rachel Reeves to break Labour’s manifesto vow and raise taxes this autumn. The Institute for Government published a report calling for serious tax reform rather than an eclectic grab bag of tax rises, arguing that raising substantial revenue will likely require broad-based measures paid by a wide swath of the population and should be designed to avoid adding further complexity to an already intricate system.

The study outlines the main candidates for meaningful revenue gains as increases to the core rates of value-added tax, income tax and national insurance — even if that implies undoing one of Labour’s manifesto commitments and incurring a political price. It cautions that wealth taxes would be difficult and risky to use as a primary revenue source, given the uncertain yield and potential behavioral effects among a relatively small group of taxpayers. The document frames broad-based changes as the more reliable path to raising material sums compared with targeted levies.

Chancellor Reeves has repeatedly promised not to hike the main rates of national insurance, income tax or VAT at the November Budget. The IfG’s recommendations come as other researchers weigh in on the fairness and sustainability of the tax system, including calls from some Labour MPs for new wealth taxation and reform more broadly.

The Institute for Government notes that the revenue yield from a wealth tax would be highly uncertain, and sensitive to the behavior of a relatively small group of high-net-worth individuals. By contrast, broad-based tax increases would spread the burden across a larger population, the group argues, potentially making reforms more politically palatable in theory but risking criticism that Labour’s manifesto promises have been breached.

The report cites a separate analysis from the Resolution Foundation, which urged Reeves to cut national insurance by 2p and offset that with a 2p rise in income tax. The think tank argued the swap could raise around £6 billion and help address perceived unfairness since more people — including pensioners and landlords who rely on incomes outside earned wages — pay income tax.

Tom Pope, the IfG’s deputy chief economist, said Reeves faces a difficult autumn. “With tax rises all but inevitable, she should reject the path of least resistance, often taken by her predecessors, of raising taxes in an inconsistent way based on what seems easiest,” he said. “Instead, now is the time to commit to tax reform and lay out an agenda on tax that fits with her broader growth objectives.”

Government officials have reiterated that the rates of VAT, income tax and national insurance will not be increased at the November Budget. The IfG’s stance underscores a broader debate about how to balance growth objectives with revenue needs in a period of fiscal constraint, a debate that has intensified as policymakers weigh short-term pressures against longer-term sustainability.

The IfG emphasizes that the chancellor’s approach to tax reform should be coherent and growth-oriented, rather than a patchwork of measures with uneven economic effects. While the organization acknowledges the political realities Reeves faces, it urges a clear framework for tax reform that aligns with broader economic goals and helps ensure the tax system remains fair, efficient and understandable. The publication arrives shortly after other think-tank analyses, highlighting a convergence around the idea that substantial reform may require difficult choices and a willingness to confront manifesto commitments in light of fiscal needs.