Middle earners and the better off have been warned by the Prime Minister that the autumn budget will be “painful”.
In a speech yesterday, in the Rose Garden of Downing Street the Prime Minister gave the strongest indication yet that his government will hike taxes later this year and in a warning to middle class families and the better off, he said that “those with the broadest shoulders should bear the heaviest burden”.
In a reprise of previous warnings from the labour chancellor Rachel Reeves, Sir Keir painted a gloomy picture of the nation’s finances, saying his Party had inherited a huge deficit which he laid the blame squarely at the conservative party’s door.
“In the first few weeks, we discovered a £22-billion black hole in the public finances. And before anyone says oh this is just performative, or playing politics let’s remember the OBR did not know about it. They wrote a letter setting that out. And they didn’t know – because the last government hid it.
“Even just last Wednesday, we found out that – thanks to the last government’s recklessness we had borrowed almost 5 billion pounds more than the OBR expected in the last three months alone. That’s not performative – that’s fact.”
He went on to say that he wanted to be “honest with people” about the choices the Government face and “how tough this will be” adding “frankly – things will get worse before they get better”.
The Prime minister also defended his decision to means test the Winter Fuel Payments for pensioners, meaning around 10 million people will miss out on the benefit, claiming the money was needed for the NHS and schools.
The speech stopped short of providing any real detail of how the Government plans to plug the hole in the finances, however the Prime Minister has repeatedly ruled out increasing National Insurance, VAT or income tax.
With limited room for manoeuvre there is considerable speculation by members of parliament and economists that the government will focus on capital gains tax, potentially bringing this in line with the higher rate of income tax, currently 45 per cent, up from 20 per cent, extending the current income tax threshold freeze to 2028, reducing pension tax relief or raising inheritance tax.
Laura Trott, the shadow chief secretary to the Treasury, said: “Starmer’s speech has made it clear [that] ruinous tax rises, which he’s always planned, are on the way. Pensions, investments, homes – nothing will be safe. And, when introduced, he will have broken his election promise to the British people.
“Increasing tax is a political choice. One he has chosen to make so he can afford inflation-busting payouts to his union paymasters. Hard-working people and entrepreneurs will now have to foot the bill. The British people will not forgive him.
The Prime Minster concluded his speech claiming that his government would be different. That it would be free of sleaze and cronyism. Reminding those in attendance that the Rose Garden was the setting for one of the infamous Downing Street lockdown parties he promised that the “garden and this building are back in your service”.
However, he was immediately forced on to the back foot and asked to defend his fledging record by the assembled journalists after it emerged over the weekend that he had given a No 10 security pass to a top donor, Lord Alli, who had personally donated to the Labour leader and the party and had held a post-election reception in the very Rose Garden for other Labour donors.
He was then challenged over allegations of large numbers of political appointments to Civil Service.
Defending himself Sir Keir said that the allegations were coming from the people who had damaged the country, but a number of those attending questioned the inclusion of an attack on the morals of the previous government at a time when Labour is embroiled in its own cronyism row.
Tax hikes on their way hints Sir Keir Starmer, while getting embroiled in cronyism row
