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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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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.”

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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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Wyoming proposes bill for Strategic Bitcoin Reserve

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Wyoming proposes bill for Strategic Bitcoin Reserve

Wyoming has become the latest US state to propose a bill for a Strategic Bitcoin Reserve, just days before Donald Trump’s US presidential inauguration.

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Was Tusk doing Brussels’s bidding with his ‘Breturn’ plea?

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Was Tusk doing Brussels's bidding with his 'Breturn' plea?

When Nigel Farage’s Reform UK is just one point behind you in the opinion polls, the last thing you want to be reminded about is Brexit.

If you’re Sir Keir Starmer, that is.

No doubt Poland’s prime minister, Donald Tusk, was trying to be friendly. After all, as Sir Keir said, they share a passion for Arsenal Football Club.

But when Mr Tusk declared at their joint news conference in Warsaw that his dream was “instead of a Brexit, we will have a Breturn”, Sir Keir visibly cringed.

Was it an ambush? Not quite. But it was certainly awkward for the UK prime minister. He stood stiffly and didn’t respond, not once uttering the word “Brexit”.

Mr Tusk, however, has form for bemoaning Brexit. He was, after all, the president of the European Council when the UK voted to leave the EU in 2016.

He might now be in his second spell as Poland’s PM, but his five years at the EU make him the ultimate Brussels insider, who’s never made any attempt to hide his feelings on Brexit.

Prior to the UK referendum, in September 2015, he said Brexit “could be the beginning of the destruction of not only the EU but also of western political civilisation in its entirety”.

His most outspoken attack on the UK’s Eurosceptics came in 2019 when the-then prime minister Theresa May was struggling to get a deal. He spoke of “what the special place in hell looks like for those who promoted Brexit“.

Keir Starmer and Volodymyr Zelenskyy arrive to lay wreaths at The Wall of Remembrance .
Pic: PA
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Sir Keir also visited Ukraine on his trip to Eastern Europe. Pic: PA


Standing alongside Sir Keir, he revealed that “for obvious reasons” they discussed co-operation between the UK and the EU. He recalled that his emotional reaction to the referendum in 2016 was “I already miss you”.

He went on: “This is not just about emotions and sentiments – I am aware this is a dream of mine, that instead of a Brexit we will have a Breturn.

“Perhaps I’m labouring under an illusion. I’d rather be an optimist and harbour these dreams in my heart – sometimes they come true in politics.”

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A dream? Or a calculated move? As a Brussels insider, was Mr Tusk speaking for the EU as a whole? Was he doing Brussels’ bidding?

He may have returned to lead his homeland, but he remains a key player in Brussels.

On becoming Poland’s PM in 2023, he ended a dispute with Brussels which unlocked billions of frozen EU funds for his country.

He also orchestrated the return of his centre-right ally Ursula von der Leyen as European Commission president.

And Poland has just taken over the rotating presidency of the EU, which means Mr Tusk will be hugely influential once again, chairing meetings and setting agendas.

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Poland is back in the European mainstream. It’s where Mr Tusk would like the UK to be as well.

It’s where, privately, Sir Keir would like the UK to be. It’s just that with Reform UK almost neck and neck with Labour in the polls, he daren’t say so.

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Polish PM says he ‘dreams’ of a ‘Breturn’ as UK seeks new defence pact with ally

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Polish PM says he 'dreams' of a 'Breturn' as UK seeks new defence pact with ally

Poland’s prime minister has said he hopes for the “Breturn” of the UK as a member of the European Union – as he discussed a defence treaty with Sir Keir Starmer.

Donald Tusk, who was hosting the prime minister for discussions on a UK-Polish defence pact in Warsaw, said it was his “dream” that “instead of a Brexit, we will have a Breturn”.

Standing alongside Sir Keir at a joint news conference, the Polish premier also said he had discussed greater cooperation between the UK and the EU.

Mr Tusk, who was the president of the European Council during the years that Britain left the EU, said: “For obvious reasons, we also discussed another issue, the cooperation between Great Britain and the European Union.

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“I’m sure you will recall when we learned about the results of the Brexit referendum. I was head of the European Council… at that time. My first emotional reaction was to say: ‘I already miss you.’

“I remember our press briefings as if it was yesterday. I already miss you, that’s what I said.”

He added: “This is not just about emotions and sentiments – I am aware this is a dream of mine, that instead of a Brexit we will have a Breturn.

“Perhaps I’m labouring under an illusion. I’d rather be an optimist and harbour these dreams in my heart – sometimes they come true in politics.”

Sir Keir, who held the role of shadow Brexit secretary while Labour was in opposition and backed remain in the 2016 referendum, has repeatedly ruled out rejoining the customs union or single market.

He has, however, said he wants to deepen post-Brexit ties with Brussels

Mr Tusk was speaking after Sir Keir travelled to Poland to discuss a defence pact with the NATO ally – which Mr Tusk said he hoped would be ratified “this year”.

The new treaty is designed to protect Europe from Russian aggression, tackle people-smuggling gangs, and combat misinformation and cyber threats.

Sir Keir was also asked whether the UK’s attendance at a defence summit in Poland earlier this week meant he was in favour of “creating an army” for Europe – to which he replied he was not.

Asked about the E5 defence ministers meeting in Warsaw and whether he supported creating a common European army, Sir Keir said: “The meeting that happened the other day is vitally important. That isn’t about creating armies.

“It’s about how we share our security concerns and build on what we’ve already got.”

British Prime Minister Keir Starmer and his wife Victoria Starmer visit the Memorial And Museum Auschwitz-Birkenau, a former German Nazi concentration and extermination camp, in Oswiecim, Poland January 17, 2025. REUTERS/Aleksandra Szmigiel
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Sir Keir Starmer and his wife Victoria Starmer visit the Memorial And Museum Auschwitz-Birkenau. Pic: Reuters

As part of the defence pact, a £4bn partnership for new air defence systems in Poland has been agreed. The project will be headquartered in Bristol.

“The UK has secured £8bn of defence deals in Poland over the last three years alone, and we’re going further today, opening a new joint programme office in Bristol to deliver our £4bn partnership, to deliver the next generation of air defence systems to Poland,” he said.

He added: “We share an unbreakable commitment to NATO and an unbreakable commitment to Ukraine.”

During his visit to Poland, Sir Keir also made his first visit to Auschwitz, which he described as “utterly harrowing”.

The prime minister visited the former Nazi concentration camp, where he laid a wreath ahead of the 80th anniversary of its liberation.

After he and his wife Victoria, who is Jewish, visited the site, Sir Keir said: “Nothing could prepare me for the sheer horror of what I have seen in this place. It is utterly harrowing.

“The mounds of hair, the shoes, the suitcases, the names and details, everything that was so meticulously kept, except for human life.”

British Prime Minister Keir Starmer and his wife Victoria Starmer visit the Memorial And Museum Auschwitz-Birkenau, a former German Nazi concentration and extermination camp, in Oswiecim, Poland January 17, 2025. REUTERS/Aleksandra Szmigiel
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Sir Keir Starmer and his wife Victoria Starmer visit the Memorial And Museum Auschwitz-Birkenau. Pic: Reuters

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His visit to Poland came following a surprise trip to Kyiv on Thursday, where he reiterated his support for Ukraine and suggested that British troops could be deployed to the country as part of peacekeeping efforts.

In an exclusive interview with Sky News’ political editor Beth Rigby, Sir Keir said the UK would play its “full part” in any peace negotiations – including by deploying British troops for peacekeeping – though added that he did not want “to get ahead of ourselves”.

During his visit, Sir Keir also met Polish businesses, including the firm InPost which has announced it will invest a further £600m into the UK in the next five years to grow its operations.

It is thought that the overall £1bn investment by the firm, which operates parcel lockers, could support up to 12,000 new jobs.

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