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Is the prime minister declaring war on middle Britain in his definition of a working person and did he mislead the public in his manifesto by giving no inkling of the tens of tens of billions of pounds of tax rises happening in Wednesday’s budget?

Sir Keir Starmer’s emphatic answer to both of these questions at his closing news conference at the Commonwealth Heads of Government meeting (Chogm) in Samoa was “no”.

But the fact they were asked gives you a sense of what he’s flying back to this weekend because the £40bn gap in the public finances that Treasury sources are whispering about will have to be filled by big tax rises and spending cuts.

Budget 2024 – latest news

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Starmer questioned on tax rises

The backlash brimming over who is going to bear the brunt comes back to the first principles of what Sir Keir told me in our leaders’ debate interview, which was that he had “no plans” to raise taxes beyond what was in the manifesto.

Back then, Labour was committed to tax rises of about £8bn, based on a tax hike on private equity, the oil and gas industry and VAT on private school fees.

Those measures would pay for more teachers in schools and doctors’ appointments in the NHS.

Now the prime minister and his chancellor, Rachel Reeves, are gearing up to raise tens of billions with a 2p hike in national insurance contributions for employers, which could raise about £20bn, and possible increases in inheritance tax and capital gains tax.

Labour will of course blame the rises on its Conservative inheritance, but voters and businesses hit by tax rises next week will be forgiven for feeling misled.

For his part, the prime minister was clear in the closing news conference at the Commonwealth summit that his campaign pledge not to increase taxes on working people in terms of income tax, national insurance and VAT would be kept.

But the huge tax increases elsewhere will inevitably raise questions about whether the prime minister, who talks a lot about rebuilding trust in politics wasn’t being straight as he fought for election victory.

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He would argue that it was only after Labour lifted the bonnet on the public finances in power that he saw the extent of the damage.

But will it wash with the public given that the Conservatives ran a campaign warning of the big tax rises under Labour that are now surely on the way?

Sir Keir keeps talking about difficult decisions as he returns to what is set to be a defining week as he and his chancellor seek to land a difficult budget.

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Will the chancellor’s fiscal plan work?

The pair will be hoping that the chancellor’s decision to change her debt rules to release up to £50bn of capital to invest in Britain’s infrastructure will help tell the story of rebuilding Britain and cushion the blow of tax rises.

The prime minister had a bit of a dry run of that narrative in Samoa when he explained the hard decisions to come.

He told reporters “we are fixing the foundations, which is tough, but we are doing it on purpose because I believe very strongly that if we fix the foundations, take the tough decisions, scrub it down, make sure that our economy is on a very stable footing, which is what it will do, then that is the best platform for rebuilding the country.

“And for me, that’s the characteristics of that and what I want to be judged on is one, have we made people better off? Do they feel better off under a Labour government because we fix the foundations?”

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The problem he has in the more immediate future is that many people out there who are not hugely wealthy, who define themselves as “working people”, fear they are about to become worse off under a Starmer government.

Businesses, which Labour says it needs to rebuild the economy, are bracing for a huge new levy just months after being promised that national insurance would not rise under a Labour government.

Landlords who have properties and those who hold shares worry that this is a Labour prime minister who is coming for them after the election while not flagging he might beforehand.

His gamble is to administer the pain early in the hope of delivering real improvement in public services and living standards by the time voters go back to the polls.

In the meantime, the rocky atmosphere of his first 100 days is likely to extend into the budget and beyond.

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Crypto’s path to legitimacy runs through the CARF regulation

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Crypto’s path to legitimacy runs through the CARF regulation

Crypto’s path to legitimacy runs through the CARF regulation

The CARF regulation, which brings crypto under global tax reporting standards akin to traditional finance, marks a crucial turning point.

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Tokenized equity still in regulatory grey zone — Attorneys

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Tokenized equity still in regulatory grey zone — Attorneys

Tokenized equity still in regulatory grey zone — Attorneys

The nascent real-world tokenized assets track prices but do not provide investors the same legal rights as holding the underlying instruments.

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Rachel Reeves hints at tax rises in autumn budget after welfare bill U-turn

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Rachel Reeves hints at tax rises in autumn budget after welfare bill U-turn

Rachel Reeves has hinted that taxes are likely to be raised this autumn after a major U-turn on the government’s controversial welfare bill.

Sir Keir Starmer’s Universal Credit and Personal Independent Payment Bill passed through the House of Commons on Tuesday after multiple concessions and threats of a major rebellion.

MPs ended up voting for only one part of the plan: a cut to universal credit (UC) sickness benefits for new claimants from £97 a week to £50 from 2026/7.

Initially aimed at saving £5.5bn, it now leaves the government with an estimated £5.5bn black hole – close to breaching Ms Reeves’s fiscal rules set out last year.

Read more:
Yet another fiscal ‘black hole’? Here’s why this one matters

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Rachel Reeves’s fiscal dilemma

In an interview with The Guardian, the chancellor did not rule out tax rises later in the year, saying there were “costs” to watering down the welfare bill.

“I’m not going to [rule out tax rises], because it would be irresponsible for a chancellor to do that,” Ms Reeves told the outlet.

More on Rachel Reeves

“We took the decisions last year to draw a line under unfunded commitments and economic mismanagement.

“So we’ll never have to do something like that again. But there are costs to what happened.”

Meanwhile, The Times reported that, ahead of the Commons vote on the welfare bill, Ms Reeves told cabinet ministers the decision to offer concessions would mean taxes would have to be raised.

The outlet reported that the chancellor said the tax rises would be smaller than those announced in the 2024 budget, but that she is expected to have to raise tens of billions more.

It comes after Ms Reeves said she was “totally” up to continuing as chancellor after appearing tearful at Prime Minister’s Questions.

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Why was the chancellor crying at PMQs?

Criticising Sir Keir for the U-turns on benefit reform during PMQs, Conservative leader Kemi Badenoch said the chancellor looked “absolutely miserable”, and questioned whether she would remain in post until the next election.

Sir Keir did not explicitly say that she would, and Ms Badenoch interjected to say: “How awful for the chancellor that he couldn’t confirm that she would stay in place.”

In her first comments after the incident, Ms Reeves said she was having a “tough day” before adding: “People saw I was upset, but that was yesterday.

“Today’s a new day and I’m just cracking on with the job.”

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Reeves is ‘totally’ up for the job

Sir Keir also told Sky News’ political editor Beth Rigby on Thursday that he “didn’t appreciate” that Ms Reeves was crying in the Commons.

“In PMQs, it is bang, bang, bang,” he said. “That’s what it was yesterday.

“And therefore, I was probably the last to appreciate anything else going on in the chamber, and that’s just a straightforward human explanation, common sense explanation.”

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