A senior Labour minister today gave the strongest hint yet that businesses will be clobbered with a rise in National Insurance Contributions at the Budget.
Health Secretary Wes Streeting said that the party had not ruled out upping the NICs made by businesses before being elected, as Rachel Reeves faces accusations of ripping up a manifesto pledge.
Sir Keir Starmer’s party sad it would not raise taxes on ‘working people’, sparking a row over who was covered by the definition.
This morning Mr Streeting told Sky News that former Tory minister Laura Trott had ‘listed a whole load of things that we hadn’t ruled out, including employers National insurance rise’ before the election.
He continued; ‘Now, I don’t know if that’s going to be in the budget, but we did not rule out that or a number of other things, because we were very clear in our manifesto that every single promise we made, was a promise we could keep and one we could afford.’
It came as a top Tory said Labour’s claim that it inherited a £22bn hole in the public finances that requires a string of tax hikes at the Budget is a ‘myth’.
Shadow business secretary Kevin Hollinrake lashed out after it was revealed that the Government is to plough billions more into the NHS to try to improve healthcare.
Labour is facing major pushback over the October 30 Budget, with fears Chancellor Rachel Reeves will hammer families by freezing income tax bands, reducing relief on stamp duty, and increasing fuel duty.
She is also believed to be targeting a £1bn raid on inheritance tax by watering down exemptions and loopholes.
As Health Secretary Wes Streeting announced that millions of people are set to be handed smartwatches to track their health as part of Labour’s 10-year plan to save the NHS Mr Hollinrake said the Tories would support reform where they could.
But he told the BBC’s Sunday with Laura Kuenssberg: ‘I am concerned about some of the talk around the financial difficulties based upon this £22bn myth of a black hole.’
And Labour came under attack on the other flank with the Lib Dems saying they would oppose increasing national insurance contributions (NICs) because it could affect care homes.
It came as a new poll suggested support for Labour’s policies is in freefall as the scale of the Chancellor’s Budget tax grab becomes clear.
With Rachel Reeves planning a record-breaking £40 billion package of tax hikes and spending cuts, a poll has found that most voters now think the Tories would be better than Labour for their finances.
It is the first time the Conservatives have been ahead since Boris Johnson was Prime Minister. Just five months ago Sir Keir Starmer’s party led Rishi Sunak’s Conservatives by 15 per cent on the issue.
The unprecedented slump comes as Ms Reeves prepares to announce a welter of tax-raising measures in her horror-show Budget on October 30, the day before Halloween.
Critics say her plans could hammer growth, paralyse the housing market and tip thousands of companies into bankruptcy.
Last night, Tory leadership contender Kemi Badenoch said the public were ‘seeing the grim economic reality of a Labour Government’, adding: ‘Their union-backed student politics will give us higher taxes and lower growth.
‘The Conservative Party needs to win back the trust of voters and kick out this Government as soon as possible.’
Liberal Democrats deputy leader Daisy Cooper said today that the party will oppose the increase of national insurance contributions for employers, if the rumoured policy is in the Government’s Budget later this month.
The party’s Treasury spokeswoman said she was worried about the impact on care providers, which could send some from a state of ‘crisis to collapse’.
She added that the party is ‘deeply concerned’ about the potential increase in fuel duty that could be in the upcoming Budget.
Wes Streeting refused to rule out that the Government will freeze income tax thresholds in the upcoming Budget.
Mr Streeting had previously voted against the measure in opposition while Rishi Sunak was prime minister.
Speaking on Sunday Morning With Trevor Phillips on Sky News, Mr Streeting said: ‘I’m not going to speculate on what the Chancellor might do in the Budget.
‘If you’re asking me whether I would vote against anything in the Chancellor’s Budget? The answer is no, of course I’m not going to do that.’
Briefings from the Treasury indicate Ms Reeves is planning to freeze income tax thresholds and raise taxes including inheritance tax, stamp duty, fuel duty, capital gains tax, employers’ National Insurance contributions and air passenger duty, known as the ‘holiday tax’.
There are also likely to be ‘sin taxes’ on vaping and gambling companies.
If the briefings are accurate, it would be the biggest tax-raising budget in history – vindicating Tory claims during the election campaign that Sir Keir would drop a ‘tax bombshell’ on the electorate if he was given a large majority.
The poll by Opinium puts the Tories ahead of Labour by 23 per cent to 21 per cent when voters were asked which party was most likely to improve their financial situation.
The last time the company had the Tories ahead on the measure was in February 2021, when Mr Johnson was still in Downing Street, when the Conservatives had a five-point lead.
Labour MPs are growing increasingly concerned about the impact of the planned Budget measures on their voters, and in particular the growing perception that the party has breached its manifesto promise not to increase National Insurance nor income tax rates.
The freeze on income tax thresholds for two years beyond the promised end in 2028 is expected to bring in an extra £7 billion by pulling 1 million more people into higher rates of tax.
Labour sources have insisted this does not breach the manifesto promise that the ‘rates’ of income tax would not rise from the current levels of 20p, 40p and 45p.
The party also vowed not to raise VAT or National Insurance on ‘working people’. Labour now claims the pledge did not cover imposing National Insurance on employer pension contributions.
Sir Keir has faced a strong Cabinet backlash over planned spending cuts of up to 20 per cent.
Among those who have written to the PM expressing alarm are his deputy Angela Rayner, who is also Housing Secretary, Justice Secretary Shabana Mahmood and Transport Secretary Louise Haigh.
Ms Reeves is understood to have also clashed with Environment Secretary Ed Miliband over the cost of his beloved green projects.
It is understood that one Cabinet Minister is still refusing to agree to the cuts.
With Ms Reeves warning of ‘difficult decisions’ ahead, The Opinium poll reveals how pre-Budget briefings have created a mood of deep economic pessimism: 49 per cent of those surveyed believe that the UK economy will get worse in the next 12 months, compared with 34 per cent in May.
Almost a half, 46 per cent, described their financial situation as ‘coping’, while over a fifth consider themselves as ‘struggling’.
Voters believes that most taxes are too high – council tax, fuel duty, inheritance tax, the basic rate of income tax and capital gains tax. They think the top rate of tax and corporation taxes are too low.
The poll found Labour and the Tories are level-pegging when it comes to which party voters think would be best at setting tax levels, while Labour remains ahead on improving public services.
The Budget measures, combined with the freebie scandals which have dogged Sir Keir Starmer, have pushed the Prime Minister’s approval rating down to a record low of minus 31 per cent.
Separate polling by the Portland consultancy has found that just 18 per cent of voters have swallowed Labour’s efforts to blame the planned measures on their economic inheritance from the Tories.
Even among Labour’s own voters, only 27 per cent agree with the sentiment: ‘The previous Conservative government wasn’t honest about the state of public finances’.
Ms Reeves told Ministers at Tuesday’s Cabinet meeting that plans to fill a £22 billion hole in the public finances will be enough only to ‘keep public services standing still’, and she needed an additional £18 billion to fund a cash injection for the NHS and avoid real-terms cuts to key departments.
Allies of Ms Reeves have said the Budget would reveal her ‘vision’ – not the Prime Minister’s. One ally said: ‘Make no mistake, this will be Rachel’s Budget. You’ll see very little of Keir in it. It will be her vision for Britain’s future.’
James Crouch at Opinium said: ‘Labour’s honeymoon ended a long time ago, but the chances of the Budget turning things around look slim unless there’s a mighty rabbit to pull out of the hat.
‘With public pessimistic about the direction of the economy, and approval ratings for the PM and Chancellor at a new low, the government should expect a turbulent couple of weeks.’
Opinium Research carried out an online survey of 2,050 UK adults from October 16 to 18. Results are weighted to be politically and nationally representative.