Sir Keir Starmer was responsible for hiking taxes in Rachel Reeves’s Budget, the Chancellor has suggested.
Ms Reeves, who this morning faced a grilling at the Treasury Select Committee, revealed the decision to freeze income tax thresholds was made jointly with the Prime Minister.
There had been reports Ms Reeves was considering a manifesto-breaking increase to headline rates.
However, the Chancellor told MPs she took Sir Keir through “all of the numbers and all of the options”.
She also admitted the pair made the final decision to raise taxes “together as a team”.
The decision to freeze income tax thresholds for another three years is expected to raise an additional £8billion a year by dragging nearly three million people into the higher-rate tax bracket.
Ms Reeves had met with the Prime Minister to discuss her fiscal plans two to three times a week before she unveiled £26billion worth of tax rises on November 26.
The Chancellor said: “The Prime Minister and I met two, three times a week during the Budget process.
The Chancellor made the surprising admission during an appearance at the Treasury Select Committee
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“That is not always the case between chancellors and prime ministers, I recognise that, but there is a very close partnership between myself and the Prime Minister.
“And so we took him through all of the numbers and all of the options and we decided it together as a team, because that is what the Prime Minister and I am.”
However, Ms Reeves was also asked whether freezing income tax thresholds constituted a breach of Labour’s 2024 General Election manifesto.
Labour MPs vowed not to raise income tax, VAT or national insurance on working people.
Keir Starmer appearing at PMQs shortly after the Chancellor’s committee grilling
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Speaking at her first Budget in 2024, Ms Reeves also suggested freezing thresholds would break Labour’s tax promise.
She said: “I have come to the conclusion that extending the threshold freeze would hurt working people. It would take more money out of their payslips.
“I am keeping every single promise on tax that I made in our manifesto, so there will be no extension of the freeze in income tax and national insurance thresholds.”
However, when asked about Labour’s tax commitments earlier today, the Chancellor denied it broke Sir Keir’s election-winning manifesto pledge.
Rachel Reeves delivered the Budget in the Commons last month | PA
She said: “Our manifesto was very clear. It referred to the rates of income tax and National Insurance and the rate of VAT.
“But I have been very clear, not trying to shy away from it in any way, that everyone makes a contribution through freezing those thresholds.”
Ms Reeves’s second Budget as Chancellor was overshadowed by a deluge of leaks and an error by the Office for Budget Responsibility.
OBR chief Richard Hughes handed in his resignation shortly after details of Ms Reeves’s £26billion tax raid were accidentally published online.
Sir Keir Starmer is facing increasing pressure on his leadership
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Ms Reeves also faced calls to resign over the fiasco, with Nigel Farage reporting the Chancellor to the Prime Minister’s independent ethics adviser.
However, Ms Reeves today claimed she maintains control over the media operation at No11 and insisted leaks are not acceptable.
When asked if she was “in control of all media briefings and political operations inside No 11”, the Chancellor said: “Yes”.
She added: “Myself and the team officials are very clear about the MacPherson principles.
“Of course, as I said yesterday in Parliament, I did not disclose confidential information, but as I’ve also been clear, there have been leaks.”
An investigation called by the Chancellor into Treasury leaks remains ongoing.