Budget will be ‘painful’ with millions facing tax rises as Starmer warns ‘things WILL get worse before they get better’
Watch Sir Keir Starmer's speech in the video player above
BRITS will suffer from an onslaught of “painful” decisions at the Autumn Budget, Sir Keir Starmer warned today.
In a major speech the PM laid the ground for sweeping tax raids as he insisted that households must endure “short term pain” for the “long term good” of the economy.
Speaking from the sun-soaked No10 Rose Garden, the PM argued that “things are worse than we ever imagined”.
Sir Keir said: “There is a Budget coming in October, and it’s going to be painful.
“We have no other choice, given the situation that we’re in.
“Those with the broadest shoulders should bear the heavier burden, and that’s why we’re cracking down on non-doms.”
READ MORE POLITICS
The PM hammered the Tories for taking a wrecking ball to the economy as he vowed to fix the “rot” blighting public services and growth.
He pledged to fill a £22bn black hole in the public purse by creating an economy that “works for everyone”.
Sir Keir insisted that wealth creation is the “number one priority” of his government.
But he added that before the economy improves, life will feel worse and “trade-offs” in the October 30 budget will be essential to get Britain back on its feet.
Predictions for the Autumn Statement
The Sun’s Head of Consumer Tara Evans reveals the top predictions for the Autumn Statement:
Winter Fuel Payments
Chancellor Rachel Reeves has already announced that Winter Fuel Payments will be limited to those receiving pension credit and certain benefits. The benefit is worth up to £300 per year and currently is available to everyone over state pension age and those on certain benefits.
No rises to some taxes
Keir Starmer promised there would be no rises to National Insurance, Income Tax, Corporation Tax or VAT as part of Labour’s manifesto in the election race.
Inheritance Tax
It has been predicted that the Chancellor Racheal Reeves will make changes to inheritance tax rates or thresholds. One suggestion is the potential shortening of the gift period before death for tax exemptions.
Pensions
Pensions featured very high up in the King’s Speech, was this a hint at how high on the agenda it will feature in the budget? Experts say there are a number of options, including reintroducing the lifetime allowance cap. Ms Reeves has previously campaigned to reduce the tax relief that higher earners get on their pensions and to introduce a flat rate of 33% instead. Another possible option is changing the rules around pensions and inheritance tax.
Capital Gains Tax (CGT)
There is speculation that the £3,000 tax-free allowance could be scrapped or there may be an extension of CGT to other assets.
Business Rates
There are rumours of reforms to support small businesses, possibly basing rates on land value.
Fuel Duty
Possible rise in fuel duty, reversing the freeze since 2011 and impacting household costs. The Sun has backed drivers as part of its Keep It Down campaign since the start of 2011.
Addressing an audience of nurses, teachers, firefighters and small business bosses, Sir Keir said: “Just as when I responded to the riots, I’ll have to turn to the country and make big asks of you as well, to accept short-term pain for long-term good, the difficult trade off for the genuine solution.
“That is not the position we should be in.
“It’s not the position I want to be in, but we have to end the politics of the easy answer, that solves nothing.”
The PM repeated his election campaign vow not to hike income tax, national insurance or VAT.
But he strongly hinted that other levies aren’t as safe.
Capital gains and inheritance tax are among those tipped for a raid by Chancellor Rachel Reeves.
Analysis
By Jack Elsom, Chief Political Correspondent at The Sun
IT was a scorcher of a morning as Sir Keir Starmer breezed up to the podium in the No10 garden just after 10am.
“Sunshine, no rain, no wind”, he smiled.
But that was where the good news stopped, for the economic outlook he had come to deliver was far from sunny.
At the heart of this speech was a frank warning to families that tough times lie ahead and that the Budget in nine weeks time will be brutal.
“There is a Budget coming in October and it is going to be painful,” he grimaced.
In other words, tax rises and possibly even some spending cuts to fill what Labour claims is a £22billion black hole they inherited.
It leaves Starmer in a tight spot both economically and politically.
Having ruled out any rises to income tax, VAT, national insurance and corporation tax, he has ruled out around 80 per cent of all possible revenue raisers.
This will leave his Chancellor Rachel Reeves scrabbling for other levers to pull while remaining in her iron-clad fiscal rules – i.e. to bring down borrowing.
It almost certainly points to hikes in capital gains tax, inheritance tax, a raid on pension relief and possible other duties.
Politically, many families might feel a bit peeved that they’re being asked to tighten their belts while public sector workers like junior doctors and train drivers were handed bumper pay rises.
And where was all of this doom and gloom during the election?
Many people repeatedly asked Labour figures including the PM if taxes would have to go up.
Starmer is claiming the blame lies entirely on the Tories for wrecking the finances and “hiding” how bad they are.
He will have to hope families up and down the country buy this as they buckle up for a rough winter.
Sir Keir said: “We were being honest about the situation before the election, we set out very clearly what we would be doing with tax rises.
“What I did not expect was a £22 billion black hole.”
Sir Keir added that he isn’t scared of making “unpopular decisions”, such as scrapping the winter fuel allowance for pensioners.
Addressing the controversial move he said: “We have made that difficult decision to mend the public finances so everyone benefits in the long-term, including pensioners.
“Now that is a difficult trade off, and there will be more to come.
“I won’t shy away from making unpopular decisions now, if it’s the right thing for the country in the long-term, that’s what a government of service means.”
The PM described how dire state of public finances manifested dangerously during the far-right riots.
Sir Keir recalled that ministers constantly had to check whether there would even be enough space to lock up yobs because a lack of funding left cells filled to the brim.
He said: “Every day of that disorder, literally every day, we had to check the precise number of prison places and where those places were to make sure we could arrest, charge and prosecute people quickly.
“Not having enough prison places is about as fundamental a failure as you can get and those people throwing rocks, torching cars, making threats, they didn’t just know the system was broken, they were betting on it, gaming it.
“They thought ‘Ah, they’ll never arrest me and if they do, I won’t be prosecuted, and if I am, I won’t get much of a sentence’.
“They saw the cracks in our society after 14 years of failure and they exploited them.
“That’s what we’ve inherited. Not just an economic black hole, a societal black hole and that’s why we have to take action and do things differently.”
Responding to the speech, Shadow Chief Secretary to the Treasury Laura Trott accused the government of breaking long-repeated promises not to hike taxes.
She said: “The Government are no longer promising to protect working people from their incoming tax raid because just like pensioners, working families are next in line for Labour’s tax hikes.
“After promising over 50 times in the election not to raise taxes on working people Labour are now rolling the pitch to break even more promises.
“The Chancellor is entitled to raise taxes to pay for her expensive choices and above inflation pay rises demanded by her union paymasters, but she should have had the courage to be honest from the start.
“This a betrayal of people’s trust and we will hold them to account for their actions.”