Keir Starmer has been accused of ‘straight up lying’ to Brits as shareholders, landlords and savers face being battered with tax rises at next week’s Budget.
The PM fuelled alarm at the looming raids by Rachel Reeves as he suggested those with assets do not count as ‘working people’ and will by targeted by Labour.
The Chancellor is expected to impose the biggest tax hikes in three decades on Wednesday, raising around £35billion extra to take the burden on Brits to a record high.
But Sir Keir has been under pressure to set out what a ‘working person’ is after Labour’s manifesto said they would be shielded from increases.
He has already ruled out putting up rates of income tax, employee National Insurance and VAT, leaving Ms Reeves scrambling to target areas such as capital gains and inheritance tax for revenue.
In an interview with Sky News at the Commonwealth summit in Samoa, Sir Keir said a working person is somebody who ‘goes out and earns their living, usually paid in a sort of monthly cheque’ but they did not have the ability to ‘write a cheque to get out of difficulties’.
And when asked if this would include people who get all or part of their income from assets, he said: ‘Well, they wouldn’t come within my definition.’
Although No10 scrambled to clarify that people with small savings did count as working people, Tories accused the premier of changing his tune after winning the election.
‘Keir Starmer went into an election saying he’d protect working people only to define that as a subset of people with jobs once he won,’ Tory frontbencher Claire Coutinho posted on X.
‘Labour either had no plan for post election or straight up lied to the public on multiple fronts (£300, winter fuel, working people…)’
Other critics pointed out that many people had shares in the companies they worked for, or might have invested in second homes for their pension.
Downing Street later insisted people who hold a small amount of savings in stocks and shares still count as ‘working’.
The PM’s official spokesman said Sir Keir had been referring to Brits who primarily get their income from assets.
Sir Keir’s comments come amid widespread expectation that the Chancellor will increase capital gains tax on profits from the selling of shares.
She is also understood to be planning to impose national insurance on employers’ contributions to retirement funds – despite complaints it is a ‘straightforward breach’ of Labour’s manifesto.
That burden will seemingly be borne entirely by the private sector, with Ms Reeves pumping an extra £5billion into NHS and other budgets to avoid cuts to headcount or wages.
The rumoured £35billion of tax increases in the package would be the most raised at a Budget since 1993.
It would take the tax burden to a new peak since comparable records began in 1948 – and it is not thought to have been higher before that.
However, Sir Keir has insisted there is ‘no reason’ for entrepreneurs to leave the country.
He said: ‘My evidence that what we are saying is attractive to investors is last Monday’s investment summit that was hugely successful.
‘All the feedback back to us has been that it was very well received by a significant number of global investors.’
Sir Keir insisted people were investing in Britain ‘because of what this government is bringing to the table’.
Although Keir Starmer has pledged that the main rates of income tax, national insurance and VAT will not be increased, a variety of other options have been floated to close the gap.
VAT on private schools and non-dom crackdown – £2bn?
Employer NICs – £15bn
Extending freeze on tax thresholds: £7bn
Inheritance tax – £1bn
Pension pots – £2bn
Fuel duty – £4bn
Capital gains – £1bn?
Pension reliefs – £2.7bn
Sir Keir has made clear the Budget revenue-raising will go beyond the claimed £22billion ‘black hole’ left by the Tories.
Hundreds of thousands could be dragged deeper into the tax system by extending the freeze on thresholds again. And inheritance tax, pension pots and capital gains could also be milked to bolster the government’s books.
Official figures suggest it would be the most tax raised at a Budget since 1993, in the aftermath of the Black Wednesday Sterling crisis.
And Ms Reeves could put the country on track to pay the highest tax as a proportion of GDP since comparable records began nearly eight decades ago.
Downing Street said investors ‘shouldn’t be worried about this Budget’, despite some rushing to sell assets due to expected hikes in capital gains tax.
Attending IMF meetings in Washington DC yesterday, Ms Reeves confirmed that she is bending fiscal rules to splurge billions more on infrastructure.
The government will switch to a debt measure based on liabilities – which should allow around £50billion more borrowing for projects such as running HS2 to Euston.
However, critics warned that she was ‘fiddling’ the figures – while nervous markets continue to crank up the costs of servicing government debt.
Touring broadcast studios this morning, Treasury minister James Murray told Sky News that ‘a working person is someone who goes out to work and who gets their income from work’.
Pushed further on whether a working person could also get income from shares or property, Mr Murray added: ‘We’re talking about where people get their money from, and so working people get their money from going out to work.
‘And it’s that money that we’re talking about in terms of those commitments we made around income tax, around national insurance.
‘That’s what’s important to focus on, where people are getting their money from, getting their money from going out to work.’
Sir Keir has said the Budget will aim to ‘fix the foundations’ and ‘rebuild’ the country as he insisted that the ‘£22billion black hole’ is ‘for real’ and not ‘performative’.
‘It’s for real and we’ve got to deal with it and I don’t think we are wrong to be honest about that and we have also been clear this is a budget about rebuilding the country and therefore it will also spell out the direction of travel for the country and what we want to do with it.
‘We’ve got to get both bits of that right.’
The PM said he was ‘not prepared’ to put off the pain for another year, telling reporters that while there would be more budgets to come, he wanted to ‘tackle the inheritance in this Budget’.
‘I’m not prepared to walk past it. I’m not prepared to put it off and that is a signal of the way I want to do business which is not to pretend our problems aren’t there, it’s to actually roll up our sleeves and deal with it.’
In an interview with Sky News in Samoa, Keir Starmer was pushed on his manifesto pledge to protect ‘working people’ from tax rises and how he defined them.
‘For working people we made an absolute commitment that their income tax wouldn’t go up, their NI wouldn’t go up, their VAT wouldn’t go up.
‘I said that in the campaign, we’re going to keep to those promises. We are going to have to make difficult decisions in this budget, I’m not going to preempt the budget you know that.
‘But what we are going to do, it’s really important that we fix the foundations, that we clear up this mess once and for all and on that we build a better Britain.
‘That will be measured in people feeling better off, in the NHS not just back on its feet but fit for the future and public services working in the way that people can expect to see from their public services.
‘I would define a working person who goes out and earns their living, usually in a monthly cheque, but that’s obviously very broad so let me be clear.
‘What I mean, who I have in my mind’s eye when I’m making the decisions as Prime Minister are the sorts of working people who go out, work hard and maybe save a bit of money but don’t have the wherewithal to write a cheque to get out of difficulties if they or their family get into difficulties.
‘People who have got that anxiety if you like in the bottom of their stomach that says, we’re doing it all right, but if something were to happen to me or my family I don’t have the wherewithal to get out of it.
‘When I tell you who’s in my mind’s eye, I think everyone watching will know whether they are in that category because you carry in that situation a sort of knot in the bottom of the stomach which if push comes to shove and something happens to me and my family I can’t just get a cheque book out, even if I have savings.
‘They are the sort of people I came into politics for to try and make sure tehy had secure jobs, and didn’t have the anxiety of public services not working, to make them feel like they have better opportuniteis… that’s who I had in my mind’s eye.’
‘Pressed on whether that covered people who work but also get money from assets such as property and shares, Sir Keir said: ‘They wouldn’t meet my definition, but you can probably give me any number of examples, you’re adding a second questions to the first which is you’re asking me for a definition of a working person and then making assumptions about what kind of taxes could go up.
‘You could go through that exercise or you could ensure working people hear from me… people watching this will know whether they are in that group or not, people who work hard, who are anxious to make ends meet, and who know that if something happens to them or their family, they can’t just write a cheque book.
‘I am really concerned about them, politics for me is who do you have in your mind’s eye when you make those decisions, I’m not ideological.
‘I made clear promises in the election campaign and I intend to keep those promises, so let me be very clear about that.’