Labour is secretly planning to hike the main rate of VAT to fill spending black hole, says Jeremy Hunt

JEREMY Hunt has waged a war of words with Labour as he insisted they are secretly planning to hike VAT if they win the election.

The explosive attack came as the Tories launch a new 'piggy bank' campaign advert - telling Brits to start saving if they think Sir Keir Starmer is heading to Number 10.

But shadow Chancellor Rachel Reeves last night hit back saying the claims were "absolute nonsense" as she explicitly ruled out the VAT hike.

The Chancellor had said his opponents haven’t ruled out hiking the 20 per cent levy to help pay for pledges he claims are worth £38.5 billion in the next five years.

The Tories have launched a brand new attack advert over Labour spending plans

The Tories say now is the time for their opponents to “be honest” having refused to rule out raising the levy six times this week.

The Sun can exclusively reveal the party's new 'piggy bank' attack advert as the economy returns to the forefront of the election campaign.

It states: "If you think Labour will win start saving". It adds: "Labour promises to cost working families £2,094."

Mr Hunt says Labour have said income tax and national insurance won’t be raised but stop short of making the same commitment on the main rate of VAT.

But the Tories last night pointed to HMRC figures that say raising the main VAT rate by one per cent would bring in £9 billion - nearly covering the annual bill for unfunded commitments.

Mr Hunt said: “Two weeks ago, I set out official Treasury and independent costings showing Labour will have to raise taxes by £2,094 for every working family to make their sums add up.

“Now we know how: raising VAT, a tax that will put up prices. That will hammer families’ finances and push inflation back up just when we’ve got it back to normal.

“Instead of refusing to say what he will do, Keir Starmer needs to be honest with the British people that he is going to raise VAT to fill Labour’s spending black hole.

"We are ruling out raising the main rates of income tax and VAT – and we’re going to keep cutting national insurance as and when we can afford to do so over the long term.

"That’s how we will give families a more financially secure future in an uncertain world.”

But Shadow Chancellor Rachel Reeves hit out in the VAT row as she ruled out any such hike.

She 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. That is why we opposed the increases to national insurance when Rishi Sunak put those forward as chancellor.

"Jeremy Hunt needs to explain how he is going to fund his £71 billion unfunded spending plans that risk putting up interest rates and people’s mortgages."

Speaking before the attack, Labour’s Darren Jones said: “None of our policies requires any further funding and that’s why there is a commitment to not raising taxes in the manifesto in this election.”

He made the comments as he accused the Tories at an emergency press conference of committing to £71 billion of unfunded spending commitments.

Mr Jones said Tory plans could see a hike in interest rates that could see £350 added to the cost of the average mortgage.