Political storms are brewing in Westminster as the United Kingdom edges closer to its crucial November 26, 2025 Budget, with Prime Minister Keir Starmer and Chancellor Rachel Reeves facing mounting pressure over looming tax rises and a yawning public finance deficit. The debate reached a fever pitch during Prime Minister’s Questions (PMQs) on October 29, when Starmer notably refused to reaffirm Labour’s manifesto commitment not to raise income tax, National Insurance, or VAT—a stark departure from his unequivocal pledge just months earlier.
This moment did not go unnoticed. According to ITV News, Starmer’s refusal contrasted sharply with his July 2025 stance, when he had stood by Labour’s tax promises with a simple, confident "yes." Now, with the fiscal black hole estimated between £32 and £39 billion, and the Office for Budget Responsibility (OBR) expected to downgrade the UK’s productivity forecasts, the government’s room for maneuver is shrinking fast. Reeves, the Chancellor, is widely expected to announce tax hikes in the upcoming Budget, a move seen by many as inevitable but fraught with political peril.
During PMQs, Conservative leader Kemi Badenoch seized the opportunity to press Starmer on his wavering tax stance. Badenoch argued that Labour was "too weak" to control public spending, suggesting tax rises were a foregone conclusion. "He is raising taxes because he is too weak to control spending. He's blaming us. He's blaming the OBR," Badenoch charged, as reported by BBC and ITV News. "Last week, they were blaming Brexit. Isn't the truth that with this prime minister, it's always someone else's fault?"
The Chancellor’s predicament is clear. Labour’s 2024 election manifesto had promised not to raise the basic, higher, or additional rates of income tax, nor National Insurance or VAT, although there was some ambiguity about VAT specifics. However, with the OBR likely to revise down its economic forecasts, creating a £20 billion gap in tax and spending rules, and a total deficit as high as £39 billion, the government’s options are limited. The Resolution Foundation has suggested a combination of income tax increases and National Insurance reductions, which could raise £6 billion but would disproportionately affect the self-employed, pensioners, and landlords.
Rachel Reeves, for her part, has not ruled out further tax increases. According to The Guardian, Reeves announced tax rises worth £40 billion a year at her first Budget last November, including hikes to employer National Insurance contributions. She insisted then that she would not have to repeat the move, but now admits she is looking for ways to put the nation’s finances on a firmer footing. Some senior Labour figures privately argue that now is the time to make the case for an income tax rise—years away from the next general election and with no single, vocal lobbying group likely to oppose such a broad-based measure. Others within Labour, however, fear the political fallout from breaking a core election promise, especially as economic growth remains weak.
The numbers are stark. As ITV News points out, a 1p increase in the basic rate of income tax would raise about £8.2 billion; a similar rise in the 40p rate would bring in £2.1 billion, while the 45p rate would yield just £230 million. A 2p increase across all rates could potentially bring in £20 billion, making a meaningful dent in the estimated £35 billion budget hole. Yet, the political risks are high: such a move would be the first rise in the basic rate since 1975, when Harold Wilson raised it to 35%. Since then, both Conservative and Labour governments have reduced it to the current 20% rate.
Starmer’s reluctance to repeat his earlier tax pledge has fueled speculation that a significant tax increase is on the cards. The Guardian reports that some Labour insiders see raising income tax as the "only clean way" to fill the deficit, arguing that multiple smaller tax changes would be messy, uncertain, and potentially more damaging to the economy. Yet, the fear lingers that voters will punish Labour for what they may perceive as a broken promise.
While the tax debate dominated headlines, other significant developments unfolded in Westminster. During the same PMQs session, Kemi Badenoch pressed the prime minister on the budget’s details, seeking clarity on how Labour intends to fill the fiscal gap. Meanwhile, the government faced criticism over its handling of a high-profile deportation case. Migrant sex offender Hadush Kebatu, who was mistakenly released from prison on October 24 and re-arrested two days later, was deported to Ethiopia on October 28. The Home Office provided him £500 to facilitate a peaceful departure—a move justified as a cost-saving measure to avoid an £8,000 charter flight, but which sparked public outrage and political condemnation.
Home Office minister Mike Tapp explained on Sky News, "So it's really tough and I understand why the public, on the face of it, don't like this because neither do I, to be quite frank with you, Trevor. Now, the officers on the ground dealing with these deportations and removals have complete operational independence from us ministers sat in the Home Office and they assessed that £500 will ensure that he's peaceful on the flight so that they don't have to drag him off, put him in detention, and then charter a new flight, which would cost to taxpayers £8,000. So it's a trade off between £500 and £8,000, it is difficult to stomach, but he's gone and he can't pose a risk to the British public."
Reactions were swift. Liberal Democrat home affairs spokesperson Max Wilkinson told Sky News, "People will rightly be angry. Public trust was completely trashed after Kebatu's wrongful release and now this. This is outrageous. We need to fix our fundamentally broken immigration system." Kemi Badenoch echoed the frustration on social media, writing, "Today Keir Starmer wouldn't rule out raising tax, while he hands £500 of YOUR MONEY to a foreign sex attacker. He should've been deported immediately, not released and sent home with pocket money. Conservatives will leave the ECHR & deport foreign criminals so this can't happen."
Elsewhere, the government announced a new agreement with Vietnam to accelerate the return of migrants with no right to remain in the UK. The deal, unveiled on October 29, promises to reduce processing times by 75% initially and eventually by nearly 90%, thanks to biometric data sharing and streamlined documentation. Between January and June 2025, the number of Vietnamese nationals arriving by small boat fell to 1,026—less than half the figure from the same period in 2024. Labour leader Starmer welcomed the agreement, stating, "The number of illegal arrivals from Vietnam has already been cut by half, but more can be done. Today's agreement shows that through international cooperation—not shouting from the sidelines—we can deliver for the UK and for working people."
As the budget deadline approaches, the nation watches closely, with both the government and opposition under intense scrutiny. The decisions made in the coming weeks will shape not only the country’s fiscal future but also the political fortunes of those at the helm.
