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Sir Keir Starmer has confirmed there will be tax rises in the budget to prevent a “devastating return to austerity” and rebuild public services.

In a speech in Birmingham, the prime minister also announced the £2 bus fare cap will rise to £3, while £240m will be injected into efforts to get people back to work.

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It follows weeks of speculation on how the government plans to grow the economy and close a £40bn blackhole in the nation’s finances when it delivers its first fiscal statement on Wednesday.

Giving a teaser of what is to come, Sir Keir said: “It is time to embrace the harsh light of fiscal reality.

“Stability to prevent chaos. Borrowing will drive long term growth. Tax rises to prevent austerity and rebuild public services.”

Sir Keir did not specify what tax rises would be included, but it is widely expected that employer national insurance will go up, alongside possible increases to capital gains and inheritance tax.

Ministers have been facing repeated questions about the government’s definition of “working people”, after Labour’s election manifesto pledged not to increase taxes on working people – explicitly ruling out a rise in VAT, national insurance and income tax.

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Can tax rises in future budgets be ruled out?

Facing down critics, the prime minister said a return to austerity would be “devastating” and “disastrous”.

“This is not 1997 when the economy was decent, but public services were on their knees.

“And it’s not 2010 where public services were strong, but the public finances were weak.

“We have to deal with both sides of that coin. These are unprecedented circumstances.”

The Budget - a special programme on Sky News

Sir Keir said the budget, to be delivered by Chancellor Rachel Reeves, will include funding for local services to help get people back to work.

He said the UK is “the only G7 country for whom economic inactivity is still higher than it was before COVID”.

“That’s not just bad for our economy, it’s also bad for all those who are locked out of opportunity,” he said.

“So the chancellor will announce £240m in funding to provide local services that can help people back into work.”

Clearest indication yet that tax rises are coming


Liz Bates is a political correspondent

Liz Bates

Political correspondent

@wizbates

This may be the starkest terms we’ve ever heard the prime minister speak in as Wednesday’s defining budget looms.

He repeated the refrain of “tough choices” suggesting the pain inflicted by the cuts to the winter fuel allowance was just the beginning.

This is also the clearest expression ever that tax rises are coming, with Sir Keir Starmer describing them as necessary to prevent austerity.

What was also clear was his concept of “working people” – those who are just about getting by financially, and his determination to put them first.

It was resolute and determined, but as the budget approaches it does create a political risk, as those who don’t fit into that narrow category – business owners, pensioners, and others – are left wondering how hard they are going to be hit.

Taking questions afterwards, he confirmed reports that the £2 bus fare cap will go up by 50%.

He said the previous government only funded the current limit to the end of 2024 “and therefore that is the end of the funding in relation to a £2 capped fare”.

“I do know how much this matters, particularly in rural communities where there’s heavy reliance on buses,” he said.

“And that’s why I’m able to say to you this morning that in the budget we will announce there will be a £3 cap on bus fares to the end of 2025 because I know how important it is.”

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Kosovo PM Albin Kurti: We feel ‘obligation’ to host UK migrant return hub

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Kosovo PM Albin Kurti: We feel 'obligation' to host UK migrant return hub

Kosovo feels a “political duty” to process failed migrants from the UK, if legal issues can be overcome, the country’s prime minister has told Sky News.

Albin Kurti said there is “limited capacity” in the small nation, which has a population of fewer than two million people, but that he expected a “successful result” from negotiations.

Talks are under way, he confirmed, between officials from both countries about a migrant returns deal for those whose claims have been ruled ineligible by the UK, and are awaiting deportation to their country of origin.

A Home Office team is exploring options for how one could work, Sky News understands, although no formal request has yet been made to Kosovo to host a facility.

Mr Kurti, who is attending a Western Balkans Summit in London this week, said: “We want to help the UK, we consider that that is our friendly and political duty.

“We have limited capacity but still we want to help, and as we speak, there is regular communication between our teams of state officials from our ministry of internal affairs and lawyers about how to do this smoothly for mutual benefit.

“Of course, we want, as a country, to benefit but we consider it first and foremost our obligation to help you because you helped us a great deal and will never forget that.”

Rescued migrants are brought in by the RNLI to Dover earlier this month. Pic: PA
Image:
Rescued migrants are brought in by the RNLI to Dover earlier this month. Pic: PA

Western Balkans key allies

Sir Keir Starmer has identified the countries of the Western Balkans as key allies in the fight against irregular migration, with 22,000 people using this route to reach the UK last year.

The UK government has signed agreements to tackle smuggling gangs with Serbia, Albania, North Macedonia and Kosovo.

Keir Starmer said earlier this year that the government was in talks with unnamed countries about setting up “return hubs” which he called an “important innovation” for individuals who have exhausted all appeals in the UK system.

Kosovo is the first to confirm these negotiations are under way, and further discussions about it are likely in the margins of this week’s summit.

The small eastern European nation and the UK have strong ties, with Sir Tony Blair feted in the country for his government’s role in spearheading NATO airstrikes on Serbia in 1999, which helped end the Kosovo War.

In June, Kosovo made an agreement with the US, negotiated under the Biden administration, to take up to 50 US deportees who met certain criteria. But it is understood only one or two have arrived due to legal issues.

Kosovo would likely be seeking a defence agreement and UK investment in return, with the country concerned about Russian aggression and hostility from neighbouring Serbia.

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Tony Blair receiving a hero's welcome in Kosovo in 1999. Pic: Reuters
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Tony Blair receiving a hero’s welcome in Kosovo in 1999. Pic: Reuters

Kosovo wants security support

Mr Kurti added: “We would like mainly to get support in security – be that through strategic agreements, or through equipment and projects we might do. Our two teams are working on this, but I think this will have a successful result.”

It is not expected the UK will make a formal request until further legal issues are worked through, which could be significant.

A controversial deal made by Italy in 2023 to send thousands of migrants to two detention centres in Albania has cost millions of euros and been halted by multiple legal obstacles.

Andi Hoxhaj, Balkan expert at King’s College, said: “Such a deal is unlikely to happen at the Summit. Nevertheless, I expect some statement indicating that the UK and one or two Western Balkan countries are close to reaching an agreement.”

“Establishing an agreement with the UK would not be politically sensitive in Kosovo. The country continues to seek deeper ties with one of its strongest allies-one that played a crucial role in its path to independence.”

Kosovo has convict deal with Denmark

Sir Keir was left embarrassed on a visit to the Albanian capital in May when he announced the UK was in talks about return hubs in the Balkans, only for Albanian Prime Minister Edi Rama to say he would not allow the UK to “dump immigrants” in his country when it is in a “marriage” with Italy.

Under Yvette Cooper, the Foreign Office has shifted focus to migration – with more staff working on the issue, drawing up sanctions on people smugglers and pursuing returns agreements.

Kosovo has also ratified a deal with Denmark – another active contributor to the NATO-led Kosovo peacekeeping force – to take 300 convicts from its overcrowded prisons, due to start in 2027.

Return hubs are different from offshore processing – which is what the Conservatives had proposed with the Rwanda scheme.

It is proposed that individuals would only be sent to a return hub if their claim for asylum in the UK had been rejected – and they were awaiting deportation.

By sending them to a third country, the government hopes it will prevent people trying to frustrate and delay the process of removal and that it could act as a deterrent to people coming in small boats.

Only 3% of people of small boat arrivals in 2018-24, or around 5,000 people, were returned from the UK, according to the Oxford Migration Observatory, although removals of failed migrants from all routes has increased in the past year.

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Police should focus on ‘tackling real crime’, No 10 says, after Met Police halts non-crime hate probes

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Police should focus on 'tackling real crime', No 10 says, after Met Police halts non-crime hate probes

Officers should focus on “tackling real crime and policing the streets”, Downing Street has said – after the Metropolitan Police announced it is no longer investigating non-crime hate incidents.

The announcement by Britain’s biggest force on Monday came after it emerged Father Ted creator Graham Linehan will face no further action after he was arrested at Heathrow Airport on suspicion of inciting violence over three posts he made on X about transgender issues.

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Sir Keir Starmer’s spokesman said police forces will “get the clarity they need to keep our streets safe” when a review of non-crime hate incidents by the National Police Chiefs’ Council and College of Policing is published in December.

“The police should focus on tackling real crime and policing the streets,” he said.

“The home secretary has asked that this review be completed at pace, working with the National Police Chiefs’ Council and the College of Policing.

“We look forward to receiving its findings as soon as possible, so that the other forces get the clarity they need to keep our streets safe.”

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He said the government will “always work with police chiefs to make sure criminal law and guidance reflects the common-sense approach we all want to see in policing”.

After Linehan’s September arrest, Met Police Commissioner Sir Mark Rowley said officers were in “an impossible position” when dealing with statements made online.

File pic: iStock
Image:
File pic: iStock

On Monday, a Met spokesperson said the commissioner had been “clear he doesn’t believe officers should be policing toxic culture war debates, with current laws and rules on inciting violence online leaving them in an impossible position”.

The force said the decision to no longer investigate non-crime hate incidents would now “provide clearer direction for officers, reduce ambiguity and enable them to focus on matters that meet the threshold for criminal investigations”.

Justice minister Sarah Sackman said it is “welcome news” the Met will now be focusing on crimes such as phone snatching, mugging, antisocial behaviour and violent crime.

Asked if other forces should follow the Met’s decision, she said: “I think that other forces need to make the decisions that are right for their communities.

“But I’m sure that communities up and down the country would want that renewed focus on violent crime, on antisocial behaviour, and on actual hate crime.”

The Met said it will still record non-crime hate incidents to use as “valuable pieces of intelligence to establish potential patterns of behaviour or criminality”.

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Fed mulls ‘skinny’ payment accounts to open rails for fintech, crypto firms

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Fed mulls ‘skinny’ payment accounts to open rails for fintech, crypto firms

Fed mulls ‘skinny’ payment accounts to open rails for fintech, crypto firms

Industry watchers welcomed the idea of “skinny” master accounts as another sign of the end of crypto’s banking troubles, in what insiders describe as “Operation Chokepoint 2.0.”

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