Top Labour politicians at war over Rachel Reeves' plan for Budget income tax increase

Tensions at the top of the Labour Party over next month's Budget spilled into open warfare as Housing Secretary Steve Reed hit back at claims tax rises would shatter public trust in the Government. He rejected claims by Labour Deputy Leader Lucy Powell that voters would lose faith if the Chancellor broke a manifesto promise and increased income tax. The row came after Chancellor Rachel Reeves told watchdog the Office for Budget Responsibility that her November 26 Budget would increase personal taxation,

Mr Reed said: "We're not damaging trust in politics. We're getting on and delivering the manifesto. That's important. "But Rachel, the Chancellor, gave a speech a couple of days ago in which she said we're not going back to austerity. We will invest." Ms Powell, a former Cabinet Minister who was sacked by Sir Keir in a Cabinet reshuffle, had earlier warned against breaking a manifesto pledge not to increase income tax, National Insurance or VAT. She said: "We should be following through on our manifesto, of course. There's no question about that."

Ms Powell added: "Trust in politics is a key part of that because if we're to take the country with us then they've got to trust us and that's really important too."

The Chancellor is understood to have confirmed she will raise income tax in her November 26 Budget. She told budget watchdog the Office for Budget Responsibility (OBR) that higher personal taxation is one of the "major measures" in next month's statement, according to reports.

The OBR is tasked with assessing the impact of the measures and presenting its findings to the Treasury.

Options include increasing income tax while cutting National Insurance by the same amount. This would allow her to claim she has not increased taxes on "working people", because their total tax bill would remain roughly the same, but pensioners and self-employed people, who usually do not pay National Insurance, would pay more.

Campaigners representing pensioners are gearing up to oppose any such move. Alan Lees, Chief Executive of the National Association of Retired Police Officers and a spokesperson for campaigners Later Life Ambitions, said: "Older people are not fair game for the Treasury.

"The Chancellor talks about fairness and strong foundations, but fairness cannot mean asking pensioners to shoulder the burden for decades of fiscal mismanagement. Older people need stable incomes, secure housing and affordable care - not more uncertainty at every Budget."

Other Budget announcements could include a move towards a pay-per-mile road pricing scheme, to compensate for lost fuel duty revenue as electric cars replace petrol and diesel vehicles on the nation's roads.