One of Rachel Reeves's former top advisers has told her to U-turn on her manifesto pledge not to raise taxes for working people.
Jim O'Neill, a former Treasury minister who quit the Tories to later personally advise the Chancellor, has warned that Labour "can't commit" to its other priorities without hiking taxes after Reeves earlier pledged not to touch income tax, National Insurance, VAT and corportation tax.
Now-crossbench peer O'Neill said: "Without changing some of the big taxes, welfare and pensions, they [Labour] can’t commit to things like Northern Powerhouse Rail, small modular nuclear reactors, and various other things that will make an investment and growth difference."
The comments come after a recent poll projected Labour to be overtaken by Reform UK if a General Election were held now, potentially placing Nigel Farage in Downing Street.
Jim O'Neill has warned that Labour "can't commit" to its other priorities without hiking taxes
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A poll of polls by Electoral Calculus placed Reform UK on 29.4 per cent of the vote, with Labour trailing at 22.9 per cent and the Conservatives in third place with 18.2 per cent.
Lord O'Neill told The Independent that part of Labour's problem is they "need to stop worrying about Farage", adding that they had "four years before that should matter".
But just last week, Labou was forced into significant concessions on its benefits Bill, effectively scrapping planned changes to Personal Independence Payment (Pip) eligibility.
The changes were postponed until the Timms Review - slated for autumn 2026.
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Labour 'need to stop worrying about Farage', Reeves's former adviser said
PAThe concessions came as a result of pressure from furious backbenchers, disability groups and campaigners concerned about the impact on vulnerable people.
After being forced to drop key welfare reforms, analysts told the Treasury to plug a new £5billion "black hole" in the public finances if the Chancellor's strict fiscal rules are to be kept.
O'Neill added: “The past few days should force Government to truly prioritise, link specific priorities to their growth mission, get out of the 24/7 social media, and, crucially, recognise it can’t deliver on all three of its fiscal rules, growth mission and manifesto tax commitments.
"Something has to give."
Following the benefits Bill U-turn, Labour could be forced to include tax rises in this year's Autumn Budget.
When asked about potential tax raises by The Guardian, Reeves said there were "costs to what happened".
She explained: "I’m not going to, because it would be irresponsible for a Chancellor to do that.
"We took the decisions last year to draw a line under unfunded commitments and economic mismanagement. So we’ll never have to do something like that again. But there are costs to what happened."
The Chancellor sparked concern last week after shedding tears during Prime Minister's Questions.
Rachel Reeves was seen crying in Parliament last week
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Following the session, No11 claimed that Reeves was upset due to a "personal matter" - and the next day, she was all smiles as she visited a hospital alongside the Prime Minister and Health Secretary to roll out Labour's 10-year plan for the NHS.
A Treasury spokesman said: "It’s a personal matter, which - as you would expect - we are not going to get into. The Chancellor will be working out of Downing Street this afternoon."
Downing Street insisted that Sir Keir Starmer was not intending to sack Reeves following her upset, saying that she is "going nowhere".
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