Starmer opens door to tax raid on savers
Pressed about possible tax increases in the autumn Budget, the Prime Minister suggested they would only rise for people with enough savings to 'buy their way out of problems'.
Rachel Reeves is scrambling to fill a black hole of as much as £40bn in the public finances, following a series of policy about-turns and a slowdown in growth.
Labour pledged in its manifesto not to hit working people with higher taxes but ministers have repeatedly been unable to agree on a definition of 'working people'.
On Wednesday, the Prime Minister argued that they were the 'sort of people that work hard but haven't necessarily got the savings to buy their way out of problems', raising fears that savers could be next to be hit.
During Prime Minister's Questions, Sir Keir failed to rule out a raid on pension contributions and the self-employed.
The Treasury opened the door to a fresh raid on VAT after a minister said the Government would leave 'the headline rate' untouched.
Ministers have promised not to put up taxes for those with 'modest incomes', but have not said where the axe will fall.
Manifesto commitments
Labour pledged in its manifesto not to raise income tax, national insurance or VAT and promised working people would not pay more.
The party attacked the Tories for raising taxes in office but they went up by £40bn in Rachel Reeves's first budget, which broke Labour's manifesto pledge not to raise national insurance by increasing employers' contributions.
Rachel Reeves promised not to raise taxes again earlier this year but U-turns on welfare cuts and winter fuel are likely to force her to break this promise.
Any VAT raid would fall short of Labour's manifesto pledge not to touch the tax at all, but the Chancellor could extend it in ways that could raise tens of billions of pounds.
Options include removing VAT exemptions from some goods and services, or extending the tax to smaller businesses.
The headline rate of VAT currently stands at 20 per cent but there are a range of exemptions and exceptions that could be adjusted.
One option would be to apply the full rate of VAT to goods and services, which currently attract the tax at either 0 or 5 per cent.
This has already been done for private school fees – fulfilling a separate manifesto pledge – in an attempt to raise as much as £1.7bn per year from those educated outside the state system.
In 2012, George Osborne extended the levy to items including pasties, but was forced to U-turn following a backlash.
Questioned on Wednesday by Kemi Badenoch about a series of potential taxes which could be increased, the Prime Minister said he would not 'write the Budget' months in advance.
'Modest income'
The Conservative leader challenged Sir Keir to define what was meant by a 'modest income'.
He replied: 'I think of the working people across this country who put in every day and don't get back what they deserve.
'And that's who we're working for. That's who we're fixing the country for: the sort of people that work hard but haven't necessarily got the savings to buy their way out of problems.'
The Tory leader then quoted Darren Jones, the Chief Secretary to the Treasury, who said earlier this week that working people are 'people who don't get a pay slip'.
'Millions of self-employed people don't get a pay slip,' she said. 'So are the self-employed next in line for a Labour tax raid?'
Sir Keir sidestepped the question, saying: 'The self-employed were the very people who suffered under their watch, repeatedly suffered under their watch.'
Pension contributions targeted?
Ms Badenoch then claimed the Government would consider levying a tax on pension contributions.
'We know the Chancellor is launching a review into pension contributions,' she said. 'It's as clear as day why this is – it is because the Government is considering taxing them.
'Does the Prime Minister agree with me that a tax on pension contributions is a tax on working people?'
Sir Keir replied: 'We made absolutely clear manifesto commitments which she asked me about last week and we're keeping to. I'm not going to write the Budget months out.'
A Conservative Party spokesman said: 'Labour won't rule out hitting the self-employed with new taxes. They won't rule out a tax raid on pensions.
'And the Prime Minister says 'modest incomes' refers to anyone without savings, raising the prospect of a tax on savings in the autumn.
'Labour are treating working people with contempt. Hiking taxes is not inevitable – it is a choice brought on by the Government's economic incompetence.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Guardian
a few seconds ago
- The Guardian
British families ‘sent wrong remains' of loved ones killed in Air India crash
British families grieving after the Air India disaster have discovered that the remains of their loved ones have been wrongly identified and repatriated, according to an aviation lawyer representing them. Relatives of one victim had to abandon funeral plans after being informed that their coffin contained the body of an unknown passenger. In another case, the 'commingled' remnants of more than one person killed in the crash were mistakenly placed in the same casket and had to be separated before the internment could go ahead, the Daily Mail reported. The news came ahead of the start of a two-day state visit to London by India's prime minister on Wednesday. Narendra Modi will meet his British counterpart, Keir Starmer, to sign a landmark free trade agreement between India and the UK. The mistakes emerged when Inner West London coroner Dr Fiona Wilcox sought to verify the repatriated Britons' identities by matching their DNA with samples provided by the families, the Mail reported. The London-bound Boeing 787 Dreamliner crashed into a medical college shortly after taking off from Ahmedabad airport on 12 June, killing 241 people onboard, of which 52 were returning Britons. Another 19 people died on the ground and 67 were seriously injured. A preliminary report found the plane's fuel switches were cut off, deepening the mystery of what happened and leaving families distressed and seeking answers. The report from India's Aircraft Accident Investigation Bureau, published on 10 July, said both of the plane's fuel switches moved to the cut-off position immediately after takeoff, stopping fuel supply to the engines. While some of the dead were cremated or buried in India, the remains of at least 12 victims have been repatriated, said James Healy-Pratt, an aviation lawyer representing many of the British families. Healy-Pratt said he was looking into what had happened during the identification process. 'I've been sitting down in the homes of these lovely British families over the last month, and the first thing they want is their loved ones back,' he told the Mail. 'But some of them have got the wrong remains and they are clearly distraught over this. It has been going on for a couple of weeks [and] I think these families deserve an explanation.' He said while one the family who received the 'commingled' remains had been able to have them separated and hold a funeral service, the second family had been left 'in limbo'. '[They] have no one to bury because it was the wrong person in their casket. And if isn't their relative, the question is, who is it in that coffin? Presumably it's another passenger and their relatives have been given the wrong remains.' Sign up to First Edition Our morning email breaks down the key stories of the day, telling you what's happening and why it matters after newsletter promotion He added: 'The coroner also has a problem because she has an unidentified person in her jurisdiction.' Approached by the Mail, Wilcox said it would be inappropriate for her to comment. Healy-Pratt said the families were in contact with their MPs, the Foreign, Commonwealth and Development Office and the offices of the prime minister and the foreign secretary. 'On the known evidence, the chain of custody of these lost loved ones was unacceptably poor,' he said. 'We are investigating the causes of those failures and demanding answers on behalf of these deserving British families. We await formal responses from Air India, and their emergency response contractors – Kenyon International Emergency Services.'
Daily Mail
a few seconds ago
- Daily Mail
Keir Starmer faces split with Trump as Cabinet ministers 'demand he recognises Palestine as a state immediately'
Keir Starmer is facing major Cabinet pressure to recognise a Palestinian state amid growing horror at Israel 's brutal military action in Gaza. The Prime Minister has so far resisted calls to make a formal move, which is backed by other leaders including France 's Emmanuel Macron. But he is facing internal demands to act after Israel was accused of the 'inhumane killing' of starving civilians queuing for food, according to the Guardian. The UN food agency said the IDF fired on a crowd of Palestinians seeking humanitarian aid over the weekend. But formally recognising a Palestinian state, which would include Gaza and the West Bank, would risk a split with Donald Trump. The president, who arrived in Scotland tomorrow for a private visit to his golf courses, a close ally of Israel's Benjamin Netanyahu who has suggested turning Gaza into a tourist resort while evicting its Palestinian population. But there are signs of pressure building for a change in tack. Yesterday Health Secretary Wes Streeting called for recognition of the state of Palestine 'while there's still a state of Palestine left to recognise' as he branded Israel's attacks on healthcare workers as going 'well beyond legitimate self-defence'. Foreign Secretary David Lammy yesterday said Israel could face further sanctions from the UK if it does not agree to a ceasefire, telling broadcasters he feels 'appalled' and 'sickened' by its actions in Gaza. On Monday Mr Lammy and his counterparts from 24 other nations including France, Canada and Australia urged Israel to lift restrictions on the flow of aid into Gaza in a joint statement. He toured broadcast studios on Tuesday morning, after having condemned in the House of Commons the 'grotesque spectacle' which Palestinians have been subject to. Asked by ITV's Good Morning Britain what more he planned to do if Israel did not agree to end the conflict, the Foreign Secretary replied: 'Well, we've announced a raft of sanctions over the last few months. 'There will be more, clearly, and we keep all of those options under consideration if we do not see a change in behaviour and the suffering that we are seeing come to an end. 'It's important that we continue to work with international partners if we are to have the maximum result. 'But what I want to see is a ceasefire and it's my assessment that once the Knesset rises on July 28, we are more likely to see a ceasefire come into effect.' Israel claimed the statement from foreign ministers was 'disconnected from reality' and 'sends the wrong message to Hamas'. Before the Common rose for its summer break yesterday Mr Streeting was asked by Labour backbencher Jas Athwal about reports that Israel has attacked World Health Organisation facilities in Deir al-Balah, compromising operations. The Health Secretary told MPs: 'I deplore Israel's attacks on healthcare workers, as well as other innocent civilians trying to access healthcare or vital aid. 'These actions go well beyond legitimate self-defence and undermine the prospects for peace. 'I will be in touch with the World Health Organisation to offer my support following the intolerable incident yesterday and I sincerely hope that the international community can come together, as the Foreign Secretary has been driving towards, to make sure that we see an end to this war, but also the recognition of the state of Palestine while there's still a state of Palestine left to recognise.' Earlier this month Mr Macron used a state visit to the UK to press for recognition of Palestinian statehood in an address to Parliament, saying it was the 'only path to peace'. The French president said a ceasefire was a matter of 'absolute urgency' and that a two-state solution would bring security to the region. In June, Mr Lammy announced that two ministers in Benjamin Netanyahu's government would be subject to sanctions by the UK: Bezalel Smotrich and Itamar Ben-Gvir. The Israeli finance and security ministers were sanctioned for inciting violence against the Palestinians. Mr Lammy later also told BBC Breakfast he was using language not usually employed by a foreign secretary, who is effectively Britain's chief diplomat. Asked for his personal reaction to the scenes in Gaza, the Foreign Secretary told BBC Breakfast: 'I feel the same as the British public: appalled, sickened. I described what I saw, yesterday in Parliament, as grotesque.' He added: 'These are not words that are usually used by a foreign secretary who is attempting to be diplomatic, but when you see innocent children holding out their hand for food, and you see them shot and killed in the way that we have seen in the last few days, of course Britain must call it out.' Liberal Democrat leader Sir Ed Davey urged the Government to swiftly bring in new sanctions against Israel. He said: 'The Foreign Secretary must realise that we're past the point of threatening sanctions. We need sanctions now, including against Netanyahu and the IDF generals leading the military campaigns in Gaza. 'Every day the Government sits on its hands, more innocent civilians are being killed while over a million are at risk of starvation. Meanwhile, the hostages held by Hamas are no closer to being freed. This is utterly intolerable.' The Lib Dem leader also insisted the UK must halt all arms sales to Israel, adding: 'That must include stemming the flow of UK fighter jet parts to Israel.' Hamas-led militants abducted 251 people in the October 7 attack in 2023 that triggered the war and killed around 1,200 people. Fewer than half of the 50 hostages still in Gaza are believed to be alive. Israel's retaliatory offensive has killed more than 55,000 Palestinians, according to Gaza's Health Ministry, which says women and children make up more than half of the dead. It does not distinguish between civilians and combatants.
BBC News
a few seconds ago
- BBC News
Heathrow boss 'frustrated' for being asleep during fire
Heathrow's boss has said it was "frustrating" he slept through numerous emergency phone calls following a fire in March that led the airport's closure and the cancellation of 1,300 his first media interview since a blaze at a nearby electrical substation disrupted flights for 270,000 passengers, Thomas Woldbye said it wasn't normally the way he acted."It's not how I normally operate but on an operational level all the right things happened," he told the BBC's Today Woldbye admitted that the power outage would cost "millions" but declined to specify how much. Results from Heathrow revealed that pre-tax profit fell by 37.2% to £203m in the first six months of 2025. A review into the incident by former Transport Secretary Ruth Kelly found that Mr Woldbye missed two emergency notifications and "several" phone calls on the night of the fire and the subsequent power outage because his mobile phone had gone into "silent mode".In the early hours of 21 March, Heathrow took the decision to stop operations at the airport. Mr Woldbye became aware of what had happened at around 6:45am. He told the BBC he was satisfied with the crisis management procedures that were in place and went into action while he was sleeping."Of course, an organisation like ours has to be able to manage whether the captain's on the bridge or not and in this particular case we took the right decisions," he said. An investigation into how the fire started at an electrical substation which supplied power to Heathrow discovered that it was the result of a known fault at the site. National Grid, which owns the substation, had been aware of a problem since 2018 but failed to fix the results of the investigation were published, Heathrow said it was considering legal action against National Grid.
