SIR Keir Starmer this morning declared he will defend hiking taxes “all day long” .
At a pre-Budget speech in Birmingham, the PM said that voters have “had enough” of “crumbling public services”, as he refused to rule out more raids in the years to come.
APSir Keir Starmer said he will defend tax rises “all day long” in a major pre-Budget speech[/caption]
APThe PM pledged to run towards “difficult decisions” as he announced the £2 bus fare cap will rise to £3[/caption]
Sir Keir pledged to turn the page on decades of Tory “chaos” and “decline”, and “get Britain working”.
He said: “It is working people who pay the price when their government fails to deliver economic stability.
“I will defend our tough decisions all day long.
“It is the right thing for our country and it is the only way to get the investment that we need.”
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At his speech the PM confirmed one “tough decision” will be a 50 per cent rise in bus fares.
The £2 cap will increase to £3 in a bid to help plug the £22bn black hole in the public purse.
Sir Keir also announced that Rachel Reeves will pledge £240 million towards “getting Britain working”.
“Trailblazers” in local areas will bring together and streamline work, health, and skills support to disabled people and the long-term sick.
The trailblazers will focus on reaching people “who are not normally in touch with the system” and help them access support in skills, education, employment, or health.
Analysis
By Jack Elsom, Chief Political Correspondent
FOR someone who bangs on about “working people”, Sir Keir Starmer doesn’t exactly speak their language.
At one point in his blustering speech, the PM even promised to end the “chicanery of easy answers”.
Not a turn of phrase you’d expect to hear down the Dog and Duck.
Save for £250million to get jobless Brits back to work – (will it even make a dent in our mega welfare bill?) – it was light on details.
The Q&A which followed eked out some slivers, including that the current £2 bus cap will be raised to £3.
But there was still no white smoke on the Chancellor’s long-awaited plans for fuel duty this Wednesday.
So why is our tight-lipped PM making a big address two days out from a Budget he knows he can’t tell us about.
He appeared annoyed with accusations he was welching on election pledges to protect working people.
But he was also setting the stage for a pretty Bleak Wednesday in which the same working people would be affected.
In one of 26 mentions, he said: “Every decision we will make in the future will be made with working people in our minds’ eye.”
But in the same breath he warned that “working people know that hard choices are necessary”.
Read between the lines: Starmer desperately wants to keep working people on side – but that doesn’t mean they’ll be spared the pain.
The PM said: “I fundamentally believe that we need to run towards the tough decisions.
“I fundamentally believe we have to fix the foundations so that we can build a better future and that is tough, that is difficult.
“Nobody wants tax rises, least of all me, so we will do the hard work in this Budget to allow us then to rebuild the country.
“I can’t give you a cast iron guarantee that never again in any Budget will there be any adjustment to tax because we just don’t know what is round the corner.”
The Chancellor’s Budget on Wednesday is set to see a whopping £35bn worth of levy rises.
Inheritance and capital gains tax will go up, alongside a two per cent rise on National Insurance paid by employers.
Income tax thresholds will be held beyond 2028, while duties on beer and vapes are set to rise.
But dozens of MPs want Ms Reeves to steer clear of raising fuel duty following a 14-year campaign by The Sun to keep it frozen.
Today the PM said: “I am not going to pre-empt what happens on Wednesday.
“But obviously this is an issue that comes up at every Budget and you will see how we deal with it at this Budget.”
Ms Reeves has also confirmed £1.4bn will be spent repairing crumbling schools, while the NHS is in for around a £10bn pay day.
Nine Budget predictions that Rachel Reeves could make including pensions shake-up and alcohol price rises
By Adele Cooke, Senior Consumer Reporter
Income tax
Experts suggest that Rachel Reeves could extend the “stealth” freeze on income tax thresholds for another two years.
The personal allowance, which is the amount that people can earn before they need to pay income tax, is frozen until 2028 but the Chancellor could extend it in next week’s Budget.
As worker’s wages rise in line with inflation this could drag thousands of people into higher tax brackets through fiscal drag.
Government sources have said that doing so would not breach Labour’s general election manifesto, which promised not to increase the rate of income tax.
The move could bring in as much as £7billion a year from 2028 onwards.
Capital gains tax
Another rumour is that Labour will make changes to capital gains tax in its Budget.
Capital gains tax is charged on the profit you make when you sell something that has increased in value.
Sir Keir Starmer has ruled out charging capital gains tax for first-time buyers, which is exempt under the current system.
Experts now predict that the rate charged for higher-rate taxpayers selling a second home will remain at 24%.
But the 20% tax when selling shares or other valuable assets such as paintings or furniture could be increased.
This move may not affect basic-rate taxpayers, who currently pay 10pc, although a change to their thresholds has not been ruled out.
The Government may also alter the current threshold at which capital gains tax is due.
At the moment the first £3,000 you make in profit for selling an item that has increased in value is tax-free.
But this threshold has been reduced several times by the previous Conservative government.
First from £12,300 in 2022-23, then to £6,000 in 2023-24.
Inheritance tax
The prime minister and chancellor could make multiple changes to inheritance tax, which currently has several exemptions and reliefs.
Inheritance tax is currently charged at 40% on the property, possessions and money of someone who has died if they are worth more than £325,000.
Fewer than one in 20 estates currently pays death duties as many estates fall below this threshold.
But the tax raises about £7 billion a year for the Government.
There are several exemptions and reliefs which mean you do not need to pay inheritance tax, including gifts or giving to charity.
It is thought that changes to several of these rules are being considered.
For example, gifts which are given less than seven years before you die may be taxed.
There are also exemptions if you leave land or pasture which is used to rear animals or to grow crops through agricultural relief.
It is not yet confirmed what changes will be made in the Budget on 30 October.
Employer national insurance contributions
Experts have suggested that the Chancellor could impose national insurance on employers’ pension contributions in the Budget.
Doing so could raise £15.4 billion, which would help to plug a £40billion funding gap in the public finances.
Employers currently pay national insurance for post workers earning more than £9,100 a year.
The amount they pay is equivalent to 13.8% of the employee’s earnings above this figure.
For an employee earning £30,000 the employer would pay around £2,884.20 in national insurance.
Former pensions minister Sir Steve Webb said that if the government put up the national insurance rate by 1% it could raise an extra £8 billion a year.
But he warns that it could leave millions of workers with lower wages and less generous pensions.
If an employer has to pay more tax then their costs will go up, so they would need to save money elsewhere.
They may do this by giving employees smaller pay rises or by reducing the amount that they pay into employees’ pensions.
Sir Steve said: “Changing national insurance contributions could leave hundreds of thousands of people with a poorer retirement.”
Pensions
The Government has so far failed to rule out changes to the lump sum you can take out of your pension without paying tax.
At the moment retirees can withdraw up to 25% of the total value of their pension tax-free, up to a maximum of £268,275.
But Labour is allegedly considering cutting the tax-free amount to £100,000 in a move which could raise around £2 billion.
It is not yet clear how this would work.
Another option being considered is to charge inheritance tax on pensions.
At present pensions are not considered to be part of your estate when you die, which means that you do not need to pay IHT on them.
But some suggest that Labour could change this in a move which could leave grieving families tens of thousands of pounds worse off.
Stamp duty
Stamp duty land tax is due if you buy a property or a piece of land which is worth more than a certain price in England and Northern Ireland.
In 2022 the rate at which people start to pay it was increased from £125,000 to £250,000 for second-steppers.
Meanwhile, for first-time buyers, it rose from £300,000 to £450,000.
A discounted rate on property purchases of up to £625,000 was also introduced.
But these higher thresholds are only due to last until March 31 2025, after which point they will return to the original levels.
So far Labour has not committed to extending them.
If the higher thresholds are not extended then it could mean first-time buyers are slapped with tax bills which are £15,000 higher than before.
Cash ISAs
Savers have been rushing to open a cash ISA before 30 October to protect themselves from any tax surprises which could be announced in the Budget.
Cash ISAs are a tax-free way to save towards your financial future or invest in the stock market.
Every tax year you can save up to £20,000 in one account or split your allowance across multiple accounts.
The tax year runs from 6 April to 5 April.
You can only pay into one Lifetime ISA in a tax year and the maximum amount you can deposit is £4,000.
There is no limit on how much cash you can stash away over your lifetime.
Meanwhile, savers can be forced to pay tax on their nest eggs if they go over the personal savings allowance.
Basic-rate taxpayers can earn up to £1,000 in interest before they need to pay tax on their savings.
Higher-rate taxpayers can earn up to £500 in interest, while additional-rate taxpayers get no allowance.
But The Resolution Foundation, a think tank, has previously suggested that the government should slash the amount that can be saved into an ISA to £1,000.
They argue that by not having a cap the accounts mostly benefit those with lots of disposable income.
Alcohol duty
It has been reported that the Chancellor is considering increasing alcohol duties in the Budget.
Rachel Reeves has not ruled out pushing up the tax on spirits, beer and wine, which would raise an extra £800 million next year.
Alcohol duty is charged on all drinks which are more than 1.2% ABV strength, either at the point of production or when they are imported.
Usually, alcohol duty rises each year in line with inflation unless the Chancellor chooses to freeze it.
Although inflation is set to hit 2% next year, industry sources have said that alcohol duties could be pushed up to more than 6%.
But higher taxes could mean higher prices, which could deter drinkers and cause them to buy less.
Fuel duty
Drivers could be hit in the pocket if Labour decides to make changes to fuel duty in the Budget.
Fuel duty rates have been frozen since 2011-12.
It was cut by a further 5p in 2022 by the Conservatives in response to soaring fuel prices at the start of the war in Ukraine.
The RAC has predicted that the 5p cut could be scrapped, which could increase the cost of filling up a tank by an average of £3.30.