Keir Starmer has signalled that Britain faces high taxes for years – as he warned that ‘tough stuff is coming’ in tomorrow’s Budget.
In a gloomy pre-Budget speech in Birmingham, the Prime Minister acknowledged that ‘nobody wants higher taxes’ – but said it was time to be ‘realistic’ about the need for increased public spending.
Hinting at a new European-style high tax future, he said the ‘pretence that you can always have lower taxes and that your public services will run properly’ had been exposed as a ‘fiction’.
Chancellor Rachel Reeves is set to hike taxes by a staggering £35 billion in tomorrow’s Budget, despite claiming in the election campaign that Labour’s plans were ‘fully funded’ by modest tax proposals totalling less than £8 billion.
Britain is already struggling under the highest tax burden for decades, and tomorrow’s Budget is set to push it higher.
Keir Starmer has signalled that Britain faces high taxes for years – as he warned that ‘tough stuff is coming’ in tomorrow’s Budget – the PM is pictured with the Chancellor of the Exchequer Rachel Reeves
In a gloomy pre-Budget speech in Birmingham, the Prime Minister acknowledged that ‘nobody wants higher taxes’ – but said it was time to be ‘realistic’ about the need for increased public spending – pictured speaking at an event in the West Midlands
The Prime Minister yesterday said he hoped to get most of the pain associated with ‘fixing the foundations’ out of the way this week.
But he refused to give a ‘cast iron guarantee’ that Labour would not launch further tax raids later in the Parliament.
‘The tough stuff is coming this budget,’ he said. ‘We’re going to scrub this down into this budget, but we resist the temptation to say that at no point ever, will there ever be an adjustment to anything else in the future. The purpose of this is to ensure we do take tough decisions now, stabilize the economy and create conditions for investment can grow, which I think we are doing in so that’s the approach.’
Sir Keir said the huge tax hikes were needed to ‘prevent devastating austerity and a disastrous path for public finances’. He defended the decision to push for higher taxes, saying that unlike in 1997, we ‘never committed to the same spending plans’ as the Conservatives.
The PM said that providing stable funding for public services and investment in infrastructure and the industries of the future would put Britain back on the path to economic growth.
The Prime Minister refused to give a ‘cast iron guarantee’ that Labour would not launch further tax raids later in the Parliament
Chancellor Rachel Reeves pictured at a reception at the British Embassy in Washington DC
‘We will stick to our long-term plan,’ he said. ‘Run towards the tough decisions, rip-off the short-term sticking plasters, so we can lead our country finally but decisively out of this ‘pay-more, get less’ doom-loop – the low-growth Tory trap that for fourteen years decimated public services, destroyed our economic foundations and made working people pay the price.’
During the election campaign, Labour pledged it would not raise taxes on ‘working people’ and that it would not increase income tax, National Insurance or VAT.
But government sources have now confirmed Ms Reeves will hike employers’ National Insurance by up to 2p tomorrow, despite previously describing the levy as a ‘tax on jobs’.
And the broader tax guarantee has now been narrowed to a ‘payslip pledge’ that people will not be hit by a direct raid on their wages the day after the Budget.
Ministers have struggled to define who is covered by the ‘working people’ guarantee, with Sir Keir causing anger last week by suggesting it does not include people like landlords, who get their income through rent or investments, or people with savings.
Sir Keir made no attempt to provide a better definition, but said that working people ‘know exactly who they are’.
Chancellor Rachel Reeves is preparing to hit employers with a whopping £20 billion increase in their National Insurance bills
The PM said the Government would deliver on his pledge to ‘protect the payslips of working people’.
But Paul Johnson, director of the Institute for Fiscal Studies, said so-called working people would inevitably be hit by what looks set to be ‘one of the biggest tax-raising Budgets ever’.
He added: ‘I literally can’t think of any tax that doesn’t affect people who work.’
The Chancellor’s raid on employers’ NI is expected to raise up to £20 billion. But economists warn that workers are likely to pay the price in the long term, either through lower wages or job cuts.
However, Ms Reeves is expected to soften the blow to small business by offering help with business rates.
And Sir Keir hinted that the government may stop short of imposing the full 7p-per-litre fuel duty rise recommended by the Treasury.
The Conservatives accused Labour of not being ‘straight with the British people’ through the election campaign, given the tax rises that are expected.
Laura Trott, shadow chief secretary to the Treasury, pointed out that Ms Reeves had claimed during the election campaign that Labour’s plans ‘don’t require any further increases in taxes’ other than the tax rises set out in Labour’s manifesto.
She added: ‘Keir Starmer confirmed today that this wasn’t true.
‘The Budget Labour are about to deliver is the one they planned all along and Labour simply weren’t straight with the British people about it during the election campaign.’
