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Income taxes will have to rise in order to plug Britain’s financial blackhole and allow for reforms, the former Bank of England governor has told Sky News.

Lord Mervyn King told Sophy Ridge’s Politics Hub programme we should all recognise “the very difficult position” that Chancellor Rachel Reeves has “inherited”, as he pointed to slow growth, a high budget deficit, large national debt and interest rates rising.

But he suggested rather than employers’ national insurance contributions, employees’ income tax is what should have been hiked when Ms Reeves announced her budget in October.

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See the full episode of the Politics Hub here

Lord King said increasing taxes would be needed in order to accommodate both a rise in defence spending and public services reform, adding: “The obvious tax to raise is the basic rate of income tax, we will all contribute to it.”

Following the budget, the chancellor received backlash after announcing employers’ national insurance contributions would be increased.

“I think it would have been better to have said in the budget, ‘look, the previous government was irresponsible in cutting employees’ national insurance contributions, but let’s be frank, we were pretty irresponsible in saying we wouldn’t reverse it’,” Lord King said.

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Lord King nonetheless thinks it is still possible for the government to say to people “maybe we said some silly things before the election” but “this is the situation Britain finds itself in, this is what we have to do over the next four to five years”.

He says the public wants politicians to be “honest”, even if that means raising taxes.

“But in the long run, to raise enough money, I think we will have to raise the basic rate of income tax. And I see no harm in doing that.”

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US lawmakers tap Saylor, Lee to advance Bitcoin reserve bill

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US lawmakers tap Saylor, Lee to advance Bitcoin reserve bill

US lawmakers tap Saylor, Lee to advance Bitcoin reserve bill

Strategy’s Michael Saylor and BitMine’s Tom Lee are among 18 industry leaders who will look at ways to pass the BITCOIN Act and enable budget-neutral ways to buy Bitcoin.

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Super PAC backing ‘pro-crypto candidates‘ raises $100M

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Super PAC backing ‘pro-crypto candidates‘ raises 0M

Super PAC backing ‘pro-crypto candidates‘ raises 0M

The Fellowship PAC, launched in August, said it had “over $100 million” from unnamed sources to support the White House’s digital asset strategy.

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Starmer was aware of the risks of appointing the ‘Prince of Darkness’ as his man in Washington – to an extent

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Starmer was aware of the risks of appointing the 'Prince of Darkness' as his man in Washington - to an extent

It was a prescient and – as it turned out – incredibly optimistic sign off from Peter Mandelson after eight years as Chancellor of Manchester Metropolitan University.

“I hope I survive in my next job for at least half that period”, the Financial Times reported him as saying – with a smile.

As something of a serial sackee from government posts, we know Sir Keir Starmer was, to an extent, aware of the risks of appointing the ‘Prince of Darkness’ as his man in Washington.

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But in his first interview since he gave the ambassador his marching orders, the prime minister said if he had “known then what I know now” then he would not have given him the job.

For many Labour MPs, this will do little to answer questions about the slips in political judgement that led Downing Street down this disastrous alleyway.

Like the rest of the world, Sir Keir Starmer did know of Lord Mandelson’s friendship with the paedophile Jeffrey Epstein when he sent him to Washington.

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The business secretary spelt out the reasoning for that over the weekend saying that the government judged it “worth the risk”.

Keir Starmer welcomes Nato Secretary General Mark Rutte to Downing Street.
Pic: PA
Image:
Keir Starmer welcomes Nato Secretary General Mark Rutte to Downing Street.
Pic: PA

This is somewhat problematic.

As you now have a government which – after being elected on the promise to restore high standards – appears to be admitting that previous indiscretions can be overlooked if the cause is important enough.

Package that up with other scandals that have resulted in departures – Louise Haigh, Tulip Siddiq, Angela Rayner – and you start to get a stink that becomes hard to shift.

But more than that, the events of the last week again demonstrate an apparent lack of ability in government to see round corners and deal with crises before they start knocking lumps out of the Prime Minister.

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‘Had I known then, what I know now, I’d have never appointed him’ Starmer said.

Remember, for many the cardinal sin here was not necessarily the original appointment of Mandelson (while eyebrows were raised at the time, there was nowhere near the scale of outrage we’ve had in the last week with many career diplomats even agreeing the with logic of the choice) but the fact that Sir Keir walked into PMQs and gave the ambassador his full throated backing when it was becoming clear to many around Westminster that he simply wouldn’t be able to stay in post.

The explanation from Downing Street is essentially that a process was playing out, and you shouldn’t sack an ambassador based on a media enquiry alone.

But good process doesn’t always align with good politics.

Something this barrister-turned-politician may now be finding out the hard way.

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