Labour minister repeatedly fails to say whether Brits running small firms are working people as she sows further confusion over partys tax pledges ahead of Chancellors £35bn raid
A Labour minister has repeatedly failed to say whether Britons running small firms are working people as she sowed further confusion over the partys tax pledges.
A Labour minister has repeatedly failed to say whether Britons running small firms are working people as she sowed further confusion over the partys tax pledges.
Bridget Phillipson, the Education Secretary, was grilled this morning about who will suffer from Chancellor Rachel Reeves expected £35billion tax raid in Wednesdays Budget.
Ahead of the general election, Labour vowed not to raise VAT, income tax, or national insurance as part of a pledge not to hike levies for working people.
But Ms Reeves revenue-raising measures are set to include an increase in national insurance paid by employers, which has prompted fears of significant extra costs for small businesses.
In a BBC interview, Ms Phillipson insisted that working people will not see higher taxes on their payslip as a result of Labours first Budget in 14 years.
But she refused to say whether Labours definition of working people included those who run businesses.
Bridget Phillipson, the Education Secretary, was grilled this morning about who will suffer from Chancellor Rachel Reeves £35billion tax raid in Wednesdays Budget
Ms Reeves revenue-raising measures are set to include an increase in national insurance paid by employers, which has prompted fears of significant extra costs for small firms
Former Bank of England governor Mervyn King described Labours pledge on national insurance, VAT and income tax as very unwise
You are inviting me to speculate about the nature of the question that youre asking, the Education Secretary told the Sunday With Laura Kuenssberg programme.
What Im saying is that when people look at their pay slips, they will not see higher taxes.
She failed to state whether a small business owner with an average net profit of around £13,000 would be considered a working person by the Government.
Well, we can go through a range of different hypotheticals about who may or may not be captured by tax measures that may or may not happen in the Budget, the Cabinet minister said.
When Rachel is sat here next weekend you can ask her about the measures that shes announced.
I know its frustrating ahead of the Budget that I can talk about some areas, but not all of it.
I appreciate your frustration. I would love to come and say heres all the measures line by line, thats not my job, however – thats for the Chancellor.
Ms Phillipson had earlier sparked alarm as she declined to say whether Labours pledge not to raise income tax, VAT or national insurance will remain in place for the next five years.
Asked if the promise applied for the whole of this parliament, Ms Phillipson told Sky News: We think taxes on working people are already too high, because thats what they faced under the Conservatives.
I cant speculate on either this Budget or on successive budgets to come.
But Downing Street sources scrambled to clarify, as a manifesto commitment, the tax pledge would apply for the whole parliament.
Former Bank of England governor Mervyn King described Labours pledge on national insurance, VAT and income tax as very unwise.
He also said the debate around not putting up taxes on working people is a terrible illusion as he warned putting up employers national insurance was likely to depress workers salaries.
Lord King told Sky News: All this debate about not putting up taxes on working people is a terrible illusion, really.
Taxes are paid by people, theyre not paid by companies or institutions, ultimately, they fall on the amount that people can spend, and you only can raise significant amounts of money by raising taxes on most people, however you care to define that, but its most people will have to pay higher taxes.
And if they, instead of unwinding the cuts in employees national insurance contributions, put up employers national insurance contributions, that will make it less likely that companies will exceed to wage demands, they will press down on that, they will probably be less enthusiastic about creating new jobs.
Ultimately, the impact of these higher taxes has to be on the consumption of most people, however you care to define that group.
The Prime Minister was last night accused of telling a double lie by insisting the Budget would not be a war on Middle Britain nor break Labour manifesto promises.
Sir Keir Starmer denied that he misled voters when he pledged during the general election campaign not to hit working people with increases to VAT, national insurance or income tax.
At a Commonwealth summit in the South Pacific, Sir Keir was asked whether he had Middle Britain in his sights with the £40 billion package of tax rises and spending cuts, and insisted: No. Let me be clear about that.
But Tory leadership candidate Robert Jenrick said last night: Sir Keir has lied not once but twice by claiming not to have breached his manifesto promises on tax and by insisting that his Budget will not be an assault on the heartlands of Middle Britain.
Sir Keir Starmer was last night accused of telling a double lie by insisting the Budget would not be a war on Middle Britain nor break Labour manifesto promises
Conservative Party leadership candidate Robert Jenrick delivers a speech at Henry Jackson Society on October 25
Mr Jenrick added: Nobody voted for Rachel Reevess raid on working people. This is a political choice and we must fight it.
It turns out Labours election manifesto was another dodgy dossier – they lied to the British people through their teeth.
Wednesdays Budget is also likely to include increases to capital gains and inheritance taxes and extend freezes to income tax thresholds, dragging more people into higher rates as wages rise with inflation.
Amid growing consternation among Labour MPs over the potential long-term electoral impact of the measures:
- Former Chancellor Kwasi Kwarteng warns in a Mail on Sunday article that class war is back, adding: The stupidity of trying to distinguish between workers and investors in property and other assets is pure socialism... the hopes of working people will be shattered by the sledgehammer of Labour tax and spend;
- James Reed, the boss of Britains biggest recruitment firm Reed, said the additional National Insurance burden Ms Reeves is expected to announce on businesses will lead to a sharp decline in them taking on new staff;
- Treasury sources said that £1.4 billion would be allocated in the Budget for school rebuilding as part of wider steps to protect education and early years priorities;
- New figures showed the public sector has ballooned to a record 5.8 million jobs under Labour, with 318 new posts created every day;
- Ms Reeves is tipped to announce a boost for craft beer brewers and Scotch whisky distillers;
- Military sources claimed that the historic Royal Naval College at Dartmouth could fall victim to spending cuts.
Speaking before boarding a 27-hour flight back to Britain, Sir Keir told a press conference at the Commonwealth Heads of Government summit in Samoa: We were very clear about the tax rises that we would necessarily have to make.
Chancellor Rachel Reeves is preparing to hit employers with a whopping £20 billion increase in their National Insurance bills
Kwasi Kwarteng leaves Downing Street on September 6, 2022 after being appointed chancellor
He insisted that the increase in employers National Insurance contributions would not be a manifesto breach because the pledge was restricted to working people.
He has classified that as meaning someone who goes out and earns their living, usually paid in a sort of monthly cheque.
However, higher costs for employers are expected to have a knock-on effect on employees as they deter recruitment and stunt wage rises.
In a faintly farcical clarification, Downing Street later stated that those who hold a small amount of savings in stocks and shares still count as working people.
The Prime Ministers official spokesman said that Sir Keir meant someone who primarily gets their income from assets would not be considered a working person.
Ms Reeves said during the election campaign: We certainly wont be increasing income tax or National Insurance if we win.
At his press conference, Sir Keir repeated his assertion that he was planning to fix the foundations of the economy after the Tories had left behind an alleged £22 billion black hole in public finances.
He said: We were clear in the manifesto and in the campaign that we wouldnt be increasing taxes on working people, and spelt out what we meant by that in terms of income tax, in terms of National Insurance contributions and in terms of VAT, and we intend to keep the promises that we made in our manifesto.
Prime Minister Sir Keir Starmer arriving at a leaders retreat during the Commonwealth Heads of Government Meeting in Samoa
Experts have also warned that planned changes to the fiscal rules to allow Ms Reeves to borrow up to £50 billion extra for investment projects are likely to lead to higher mortgage rates.
But while in Opposition, the Chancellor said she would not fiddle the figures to secure extra resources.
Shadow Chancellor Jeremy Hunt last night branded it a scandal that Labour did not come clean about tax hikes before voters went to the polls.
He said: Its clear that this Budget will be a hammer blow for working people.
Keir Starmer promised at the election he wouldnt raise taxes on working people, but its clear that he doesnt have a clue as to what the definition of a working person even is.
The real scandal is that Keir Starmer and Rachel Reeves always planned to raise taxes, they just didnt have the courage to tell the British public at the election.
