Chancellor Rachel Reeves has decided not to hike income tax in her Budget after all.

MPs cannot agree whether it was the right move for the government to unexpectedly chose to drop plans to hike income tax in its upcoming Budget or if it just makes Labour look even weaker.

As first reported by the Financial Times, Rachel Reeves told the Office for Budget Responsibility on Wednesday she was no longer going forward with the income tax increase – despite repeatedly laying the groundwork for such a change only last week.

It was initially said that the chancellor had changed her mind amid wider fears of backlash from Labour MPs and voters at a time when the government is already deeply unpopular with the public.

Bloomberg has since reported that better economic forecasts suggested Reeves’ fiscal black hole was closer to £20 billion instead of £30 billion, as expected – enabling her to pull back on some of her radical plans.

This U-turn means Reeves won’t break her manifesto pledge not to hike income tax, either.

However, the chancellor does still have to fill a large gap in the public finances when she unveils her Budget on November 26 – and it remains unclear how she intends to raise the necessary revenue.

MPs seem split in their response to the reports.

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