In a recent statement, Prime Minister Keir Starmer firmly rejected accusations that he misled the public regarding planned tax increases throughout the election campaign. This comes amid reports that Chancellor Rachel Reeves is considering a rise in national insurance contributions for employers.
When pressed about whether he had failed to inform voters about the significant tax hikes anticipated in the upcoming budget, Starmer responded, “No, we were very clear about the tax rises that we would necessarily have to make whatever the circumstances. I listed them—I don’t know how many times—in the campaign.”
He emphasized the clarity of the Labour party’s manifesto and campaign promises, asserting, “We were really clear that we wouldn’t be increasing taxes on working people and specifically outlined what that meant in terms of income tax, national insurance contributions, and VAT. We intend to keep the promises we made.”
Reports suggest that Reeves is set to raise the national insurance rate for employers by up to two percentage points, aiming to generate £20 billion for public services, including the NHS, in Labour’s first budget in 15 years. National insurance contributions represent the UK’s second-largest revenue source, after income tax, with employers currently paying a rate of 13.8% on employee earnings over £175 weekly. Additionally, the chancellor is expected to lower the earnings threshold at which this tax begins.
A spokesperson from HM Treasury commented, “We do not comment on speculation around tax changes outside of fiscal events,” while employers expressed concerns that this move could be detrimental, labeling it a tax on jobs that may hinder hiring and wage increases. Martin McTague, chair of the Federation of Small Businesses, voiced strong opposition, stating, “What it will do is damage growth; it certainly increases wages,” and warned that such a change would lead to reduced employment opportunities.
A government source defended the prospective tax increase, saying, “There is a universal consensus that the NHS needs more money… That means asking businesses to help out. The choice is investment versus decline.”
In the lead-up to next week’s budget, much debate has centered around the Labour party’s commitment, repeated 21 times in their manifesto, to refrain from raising taxes on “working people.” Starmer has faced criticism over comments suggesting that individuals earning income from stocks and shares do not qualify as working people, which he later clarified as referring to those who primarily derive their income from assets.
The government is anticipated to adjust capital gains tax on the sale of shares and other assets, which currently stands at up to 20%, by several percentage points. When questioned about whether his policies might be perceived as a “declaration of war on middle Britain,” Starmer clarified, “No. Let me be clear about that. What we’re doing in the budget is twofold. First, we are fixing the foundations, addressing the inheritance we have, including the £22 billion black hole. We have to deal with that. In the past 14 years, leaders have walked past these problems and created fictions, and I’m not prepared to do that. We’re going to fix the foundations. After that, we’ll work on rebuilding our country.”
He assured the public that after making these tough decisions, there would be a brighter future ahead. “What I want to be judged on is whether we’ve made people better off. Do they feel better off under the Labour government, because we fixed the foundations? And secondly, whether we can genuinely get the NHS back on its feet.”
