Landlords and shareholders face tax hikes as row erupts over Labour’s definition of ‘working people’

25 October 2024, 07:32 | Updated: 25 October 2024, 11:26

Landlords and shareholders are facing a tax hike at the Budget next week after Keir Starmer suggested they were not "working people".

Starmer, who has repeatedly promised that so-called "working people" will not have their taxes increased, said that he did not consider people whose income derived from assets such as shares or property to fall into that bracket.

"They wouldn't come within my definition," he said.

Speaking to LBC's Nick Ferrari, a junior minister was unable to clarify what Starmer meant.

James Murray, the Exchequer Secretary to the Treasury, said: "There are obviously people across the country who are working hard.

James O'Brien on landlords facing a 'tax hike'

"And what we're saying is that people working, people who go out every day to earn their income through going to work, those are the people who we've got a specific commitment in our manifesto around protecting."

Starmer's comments have been taken as an indication of where tax rises might come from in the Budget, as Labour seeks to plug a 'black hole' in the public finances.

The party have found themselves squeezed after repeatedly saying during the General Election campaign that they would not increase taxes on working people, including VAT, national insurance, and income tax.

Rachel Reeves' 'former mentor' has some tips for the Chancellor ahead of the Budget

Among the levies which are reportedly under consideration for a hike are capital gains tax, inheritance tax, and fuel duty. Starmer has already suggested that an increase in employer national insurance could be on the way.

Later, in a partial climbdown on the Prime Minister's comments, a Downing Street spokesperson clarified that people who hold a small amount of savings in stocks and shares still count as working people.

The Prime Minister's official spokesman said Starmer meant someone who primarily gets their income from assets.

It comes as Starmer's Chancellor Rachel Reeves said she would rewrite debt rules in a bid to free up £50bn in spending.

Ms Reeves confirmed on Thursday that she will change the way debt is calculated to take into consideration investment spending.

The Chancellor said her fiscal rules will ensure that debt falls "during the course of this parliament".

It comes after the previous government set "rolling" targets for itself, which only required debt to fall between years four and five.

The move is expected to free up £50billion to help fund long-term spending projects.

Speaking at the annual meeting of the International Monetary Fund (IMF), Ms Reeves said: "I can confirm that we will be changing the way that we measure debt in the budget statement next week.

"We will get debt falling as a share of our economy during this parliament but the changes that we will make to the investment rule will free up money to invest in things that deliver a long-term return for our country and for our taxpayers."

Strict "guardrails" will ensure additional borrowing is not used to fund "day-to-day spending or on tax giveaways".