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British Chancellor Sir Keir Starmer has warned that the autumn budget “will be painful”, giving the strongest hint yet that a Labour government may raise taxes in October.
Speaking from Downing Street on Tuesday, Starmer said his government’s first fiscal package would have to make “big demands” on people, particularly the wealthy.
“The budget will be announced in October and it’s going to be painful,” he said.
“Given the situation we find ourselves in, there is no other choice,” he added, referring to what Labour has described as a £22bn “black hole” left in the public finances by the Conservatives.
Starmer is betting that people will hold the former Conservative government accountable for the tax hikes and that they will not hinder his government’s push for higher growth.
The Chancellor made growth the Government’s top priority and warned that what he inherited from his predecessor Rishi Sunak was “even worse than we imagined”.
Labour rejects any increases to income tax, national insurance or VAT, which account for the majority of government revenue.
He did not elaborate on which taxes might be raised in the fall budget.
Last month, Chancellor of the Exchequer Rachel Reeves warned on the Newsagents podcast that Britain should expect tax rises in October, saying: “I think we’re going to have to raise taxes in the Budget.”
Sharon Graham, general secretary of Britain’s largest trade union, Unite, criticised Mr Starmer’s “bleak vision for Britain” and said it was “time to see the change Labour has promised”. She called for a wealth tax on the super-rich and a levy on excess profits.
The Conservative Party accused the Prime Minister of paving the way for “compulsory taxation”.
Shadow Treasury Secretary Laura Trott said Mr Reeves was not raising taxes because of Mr Sunak’s legacy but “to pay for his own expensive picks and the above-inflation pay rises demanded by union paymasters”.
On Tuesday, Starmer defended his decision to accept the recommendations of an independent pay review body and give civil servants a pay rise of 5-6%.
“The country is suffering huge losses by just letting the nationwide strike go unchecked and not resolving it,” he said.
The Prime Minister also reluctantly ended winter fuel payments for millions of pensioners, saying: “We must improve our NHS, our homes and our schools”.
The Prime Minister said Downing Street’s Rose Garden, where lockdown parties were held during the pandemic, had become a symbol of corruption under the Conservative government.
Mr Starmer also said the summer riots had exposed a “deeply unhealthy society” riven by “cracks in its foundations”.
Liberal Democrat leader Sir Ed Davey agreed the Conservatives had left a “toxic legacy” and called for “bold and ambitious action” from Labour to “repair this mess”.
Starmer also responded on Tuesday to allegations of cronyism that have dogged his administration over the past two weeks.
Referring to reports about the appointments of donors to senior civil servants, he said: “Most of these allegations are coming from the same people who let our country decline in the first place.”
Mr Starmer said he recognised “what a huge task” it was to get the country back on track. “That’s why we’re trying to get people into the best jobs in the first place,” he said, adding that he was determined to restore honesty to the government.
The prime minister said he still intended to set up a new ethics and integrity commission with an independent chair, but could not say when it would be launched.
