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Sir Keir Starmer said on Thursday that anyone who owns shares and rental property is not a “working person”, as his chancellor Rachel Reeves prepares to unveil a Budget that will feature numerous tax increases.
The prime minister promised in Labour’s election manifesto he would “not increase taxes on working people”, ruling out rises in income tax, national insurance or value added tax.
Starmer is coming under increasing scrutiny about what he means by the phrase “working people” given the October 30 Budget is due to involve up to £40bn of tax rises and spending cuts.
Reeves is expected to use the Budget to raise national insurance employer contributions, increase capital gains tax on share transactions, and extend an existing freeze on income tax thresholds.
That has prompted criticism from the opposition Conservative party that Labour is poised to break its manifesto pledges.
Starmer, interviewed by Sky News at the Commonwealth heads of government summit in Samoa, was asked whether someone who had a job but also received income from assets such as shares and property could be defined as a working person.
The prime minister replied: “Well, they wouldn’t come within my definition.”
About three in 10 people in the UK hold shares, according to research from Statista.
Starmer earlier insisted the Budget would not drive entrepreneurs abroad because of the anticipated tax rises on businesses and the wealthy.
The prime minister said, on the contrary, he was confident there would be various inward investment announcements by big companies in the run-up to Christmas.
In the third quarter, the UK recorded a 16 per cent increase in capital gains tax receipts, largely driven by investors taking pre-emptive moves ahead of the Budget.
Some wealth managers have claimed many of their clients are considering moving offshore as a result of the looming tax rises.
But asked by the Financial Times if some entrepreneurs would move abroad to avoid higher taxes, Starmer replied: “There is no reason to.”
The prime minister pointed to the government’s recent investment summit in London as proof that business took a positive view of the Labour administration.
Starmer said that £63bn of announcements of corporate investment in Britain at the end of the summit was “clear evidence” that business leaders had confidence in the government.
He said the fiscal event on Wednesday next week would be “an important Budget” which would be Labour’s “first opportunity to define the way in which we will approach the economy”.