Rachel Reeves may be on the verge of breaking another tax pledge, according to leading economist Julian Jessop. The Chancellor is reportedly considering extending the freeze on personal tax thresholds beyond 2028 despite previously ruling it out. The move would result in a further tax rise on millions of workers and risk damaging confidence in the Government’s economic strategy.

Mr Jessop told the Express: “Extending the current freeze on income tax and National Insurance thresholds beyond 2028 is one of several ways in which the Chancellor might raise more money without breaking the manifesto commitments on personal tax rates. The October 2024 Budget had already extended the freeze on inheritance tax thresholds for a further two years until 2030. However, this move would be yet another increase in the tax burden on ‘working people’, as Ms Reeves herself acknowledged when promising not to extend the freeze in her Budget speech last autumn.” He warned that the existing freeze has already led to a sharp rise in the number of middle-income households paying higher rates of tax.

Mr Jessop, added: “The total number of higher-rate taxpayers is already set to hit nine million by 2028, and extending the freeze could take this figure above 10 million.”

The Financial Times has likewise suggested that the Treasury is exploring ways to raise additional revenue ahead of the spring Statement on March 26.

Extending the freeze would reportedly generate around £4billion annually from 2028-29, but economists have questioned whether such a move would be worth the political fallout.

In his latest op-ed, Mr Jessop argued that even the discussion of such tax hikes is damaging. He wrote: “The simple fact that we are already talking about further tax increases – and that the Treasury appears to have endorsed these reports – shows that the current economic and fiscal strategy is not working.”

He also claimed the speculation might be part of a deliberate strategy by the Treasury.

He explained: “This might also just be ‘kiteflying’ by the Treasury so that the Chancellor can rule out an unpopular option on or nearer the day, and look a little better. Nonetheless, the speculation alone is damaging enough.”

Ms Reeves has so far remained tight-lipped on the reports, but any move to extend the freeze would contradict her own words in the October Budget.

At the time, she insisted: “From 2028-29, personal tax thresholds will be uprated in line with inflation once again. When it comes to choices on tax, this Government chooses to protect working people every single time.”

The Chancellor is under pressure to balance the books while maintaining key spending commitments, but critics argue that further stealth tax rises will only deepen public disillusionment.

Speaking yesterday, she denied that Labour is heading towards austerity as she confirmed plans to cut Civil Service running costs by 15%.

She told the BBC‘s Sunday with Laura Kuenssberg: “Last year, I put £100 billion more into capital spending than the previous government had committed to, we put more than £20 billion into the National Health Service. That is a far cry from what we’ve seen under Conservative governments in the last 14 years.”

She said any budgets to unprotected departments, such as the Ministry of Justice, would be set out in the spending review in June.

She added: “We’ll set all that out when we do the spending review, but we can’t just carry on like we have been spending on the same things that the previous government spent on. “People want to know we’re getting value for money, when people are paying more in tax that they’re getting more in return.”