Pensioners, the wealthy, landlords and people with significant shareholdings appeared to be in Rachel Reeves sights for a major tax raid in the Budget.
Sir Keir Starmer and ministers have been grilled on what their definition is of “working people” after they said these individuals would be protected from the brunt of a string of tax increases due to be unveiled on Wednesday October 30, many of which could hit London hard.
Labour’s manifesto rules out an increase in the rate of VAT, National Insurance and income tax, and the Prime Minister and Chancellor have sought to caveat the pledge to applying to “working people”.
The Prime Minister had suggested asset owners would not fall within his conception of what a working person is.
During a broadcast interview at a Commonwealth summit in Samoa, Sir Keir told Sky News that he does not consider people who have an income from assets such as shares or property to be working people.
“They wouldn’t come within my definition,” he said.
Downing Street later clarified that people who hold a small amount of savings in stocks and shares still count as “working people”.
On Friday morning, Treasury minister James Murray said it is “important to focus on” where people are getting their money from in relation to the debate over the “working people” definition.
“A working person is someone who goes out to work and who gets their income from work,” he told Sky News.
Asked on Times Radio who did he envisage with the phrase “working people,” Mr Murray said: “I picture people who go out to work for their income.
“The Prime Minister set this out overnight in quite a powerful way, saying the kind of people that he and the Chancellor will have in mind when making decisions, people who are working hard, earning their income by going out to work every day, may have some savings but don’t have enough to write a cheque if a big problem comes along and hits them in life.
“We want to make sure that we are protecting working people now because they have got squeezed in the cost-of-living crisis in recent years.”
He was grilled on LBC radio, whether landlords were “working people” and declined to include them in this group.
The Chancellor is believed to be considering a wave of tax rises including on employer National Insurance, possibly on their pension contributions, raising capital gains tax to at least 33 per cent but not as high as 39 per cent, increasing inheritance tax, freezing the thresholds for paying income tax for another two years, and changes to stamp duty.
The statements by the PM, Chancellor and ministers about the definition of “working people” has left the door wide open to pensioners, the wealthy, landlords and people with significant shareholdings facing a tax blow in the Budget.
Ms Reeves has also loosened her debt fiscal rule to borrow tens of billions more for transport and other infrastructure projects but this has sparked warnings that the move could put upward pressure on interest rates and mortgage bills.
She is believed to be seeking a package of some £40 billion, mainly from tax rises and some spending cuts, to tackle an alleged £22 billion black hole in the public finances which she says the Tories left, a claim they deny, and also spend more on Labour priorities including the NHS, with waiting lists still at over seven million.
