Chancellor Rachel Reeves has indicated she will break key manifesto tax pledges in her upcoming budget, while giving the strongest signal yet that she plans to lift the controversial two-child benefit cap.
Breaking Manifesto Promises
The chancellor told BBC 5Live that the world has changed dramatically since Labour's election victory, making it impossible to honour all campaign promises. She specifically referenced her party's manifesto commitment not to raise national insurance, VAT, or income tax for working people.
"It would, of course, be possible to stick with the manifesto commitments, but that would require things like deep cuts in capital spending," Reeves stated during her Monday interview. The chancellor emphasized that she has been "very clear that we are looking at both taxes and spending" ahead of the budget scheduled for 26 November 2025.
Global Economic Pressures
Reeves blamed unprecedented global events for forcing her hand, citing conflicts, trade wars, and widespread tariffs that have fundamentally altered the economic landscape. In what appeared to be a direct criticism of former US President Donald Trump's trade policies, she noted that "I don't think anyone could have foreseen when this government was elected last year that we were going to see these big increases in global tariffs and barriers to trade."
The chancellor defended her position by stating she must be "chancellor in the world as it is not necessarily the world as I would like it to be." She added: "What I can promise now is I will always do what I think is right for our country, not the easy choice, but the thing that I think is necessary."
Two-Child Benefit Cap Controversy
In what represents her most explicit comments to date, Reeves strongly indicated she will lift the two-child benefit cap, stating "I don't think that it's right that a child is penalised because they are in a bigger family, through no fault of their own."
The policy, which restricts child benefit claims to the first two children in a family, has become a major point of contention within the Labour party. Seven Labour MPs were suspended just two weeks after the election for voting to scrap the measure, which would cost approximately £2.8 billion to abolish.
Reeves revealed she maintains regular contact with former Prime Minister Gordon Brown, who has been publicly campaigning for the cap's removal. "We had a good chat and we've emailed each other just today," she said, describing both Brown and Tony Blair as "big heroes" who inspired her political career through their work on child poverty.
Despite Reeves' signals, recent YouGov polling shows 59% of the public support keeping the cap, with only 26% favouring its abolition.
Shadow chancellor Sir Mel Stride criticized Reeves' approach, stating: "Rachel Reeves has borrowed, spent and taxed like there's no tomorrow - and she's coming back for more because she doesn't have a plan or the strength to stand up to Labour's backbenchers, who are now calling the shots."
