Shadow Chancellor denies Labour would raise VAT as parties trade blows on tax ahead of the election

Rachel Reeves was forced to deny Labour would raise VAT yesterday as both parties traded blows on tax and spending.

The Conservatives issued a poster saying: 'If you think Labour will win – start saving.' It adds: 'Labour plans to increase VAT.'

Chancellor Jeremy Hunt will today claim that although the Opposition has ruled out increasing income tax and National Insurance, they have not dismissed raising VAT, the tax on goods and services, which is 20 per cent at present. 

HMRC figures show raising the main rate of VAT by one percentage point would cost families £9billion a year, he added.

But Shadow Chancellor Rachel Reeves said: 'This is absolute nonsense. Labour will not be increasing income tax, National Insurance or VAT. I want taxes on working people to be lower not higher.'

Meanwhile, Labour held an 'emergency' Press conference in which the party's Treasury spokesman Darren Jones claimed the Tories had made £71billion of unfunded spending commitments.

The Tories responded by issuing their own summary of Labour's pledges, saying these would amount to a 'staggering' £196.4billion.

Last night, Rishi Sunak pledged to lower the tax burden if he wins the next election. He told The Times the economy was 'heading in the right direction' and that interest rate cuts were on the way.