One million workers set for pay cut because of new rule under Labour

As many as one MILLION workers could be set for a pay cut under Ms Reeves' budget "painful" budget plan from October 30, with the Autumn Statement taking place next week.

Rachel Reeves' Budget plan could see one million workers facing a pay cut. As many as one MILLION workers could be set for a pay cut under Ms Reeves' budget "painful" budget plan from October 30, with the Autumn Statement taking place next week.

The Labour Party Chancellor could extend the freeze on income tax thresholds in this month’s Autumn Statement. The move could raise £7billion , according to reports by the Financial Times. The Institute for Fiscal Studies (IFS) think tank said that extending the freeze would pull 400,000 more people into paying income tax, according to The Times.

Plus, another 600,000 could be dragged into paying higher and additional rates by 2029-30 as wages rise. It means a total of one million workers could be dragged into paying higher rates. When asked about possible tax changes during a press conference in Berlin, Sir Keir Starmer said: “We are going to keep our manifesto pledges.”

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He added: “I’m not going to pre-empt the individual measures that will be outlined by the Chancellor in due course.” The Prime Minister continued and went on: “This is going to be a Budget that will fix the foundations and rebuild our country.”

As a result, more workers find themselves paying higher taxes as their salaries rise with inflation. Stuart Adam at the Institute for Fiscal Studies (IFS) told The Times: "The promise not to increase the basic, higher and additional rates of income tax was carefully worded and deliberately leaves the door open to other changes to income tax that could raise money."

The Conservatives have accused Labour of breaking promises. Gareth Davies, a shadow Treasury Minister, said: "With less than two weeks to the Budget, it has become clear this Government is planning to break promises they made to the British people."

Labour had previously criticised such moves as a "stealth tax" when in opposition. However, they did not explicitly promise to reverse this policy.