Sir Keir Starmer has denied misleading the public in the general election after hinting at tax rises for those who own shares and assets.
Labour’s election-winning manifesto promised it would not “increase taxes on working people” – but it was not made clear who exactly who is considered a “working person”.
Asked by Sky News’ political editor Beth Rigby last week whether he would classify a working person as someone whose income derived from assets such as shares or property, the prime minister said: “Well, they wouldn’t come within my definition.”
It has led some critics to accuse the prime minister of targeting the middle class ahead of Chancellor Rachel Reeves’ budget next week through potential hikes to capital gains tax, national insurance raised for employers, or inheritance tax.
Chancellor Rachel Reeves will deliver her budget on Wednesday
Quizzed by Rigby at a news conference in Samoa for the Commonwealth summit on Saturday, Sir Keir denied “plotting a war against middle Britain”.
“What we’re doing is two things in the budget,” he said.
“The first is fixing the foundations, which is dealing with the inheritance that we’ve got, including the £22bn black hole.”
The prime minister was referencing Ms Reeves’ repeated claim that the Conservatives left the new government with a £22bn shortfall, requiring them to make “tough decisions”.
“In the past, the last 14 years, leaders have walked past those problems, created fictions and I’m not prepared to do that,” he added.
“And having fixed the foundations, we’re going to rebuild our country.”
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He said doing so entailed “a very clear plan” to ensure people across the UK “are better off”, that their “living standards go up” and to ensure people have the public services they are “entitled to and deserve”.
He said part of the last pledge was to “make sure that our NHS is not just back on its feet, but fit for the future”.
Asked if he had misled the public during his campaign by not revealing there would be significant tax rises in Labour’s first budget, Sir Keir said: “No – we were very clear about the tax rises that we would necessarily have to make up.
“We were really clear in the manifesto and in the campaign that we wouldn’t be increasing taxes on working people and spelt out what we meant by that in terms of income tax, in terms of NICs [national insurance contributions] and in terms of VAT, and we intend to keep the promises that we made in our manifesto.”
Sir Keir and Ms Reeves have both regularly warned the public that Labour’s first budget in 14 years will be “painful” and include “tough decisions” – rhetoric the prime minister repeated on Saturday.
Rigby has predicted taxes will be going up beyond what the prime minister said in the Labour manifesto.
But after interviewing him this week, a Number 10 spokesperson clarified that those with a small amount of savings in stocks, shares or an ISA are still considered by the prime minister to be a “working person”.
Rather, Sir Keir was talking about people who “primarily get their income from assets,” they said.
Rigby said: “What does it all mean? Well, I think that it could be that raises in capital gains tax are on the cards now.”
The budget is set to take place at 12.30pm on Wednesday 30 October.