Starmer: Working people don’t have savings

Sir Keir Starmer
Sir Keir Starmer has said he will not increase the tax burden on 'working people' - Wiktor Szymanowicz/Future Publishing via Getty Images

Sir Keir Starmer has opened the door to tax rises on millions of families by suggesting that “working people” do not have savings.

The Labour leader indicated that his manifesto commitment not to increase taxes on workers only applied to those who do not have money set aside.

His remarks were seized upon by the Tories with Jeremy Hunt saying he had “let slip Labour’s true plans to raise taxes across the board”.

Labour’s manifesto includes a pledge to “not increase taxes on working people”. But his definition of this group suggests millions of working people who have savings are excluded by his definition and could suffer tax increases.

The party has committed to not putting up income tax, national insurance or VAT if it wins power but has failed to rule out other tax rises.

During a radio interview on Tuesday, Sir Keir was asked what he meant by working people.

“People who earn their living, rely on our [public] services and don’t really have the ability to write a cheque when they get into trouble,” he told LBC.

“So the sort of people I’m meeting pretty well every day now. It’s quite a big group because these days there are many people obviously not so well off.”

Two-thirds of working-age households have savings of more than £1,000 - considered the minimum “rainy day” fund - according to the Resolution Foundation.

Meanwhile, more than one in eight Britons now use private healthcare, according to a YouGov survey carried out last year.

Sir Keir’s comments raise the prospect that Labour’s promise to not raise taxes on working people only includes the very poorest people who are in work. It could exclude people who do work but also have savings, investments or use private services like healthcare as well as pensioners.

A poll for The Telegraph, carried out by Savanta, shows that 60pc of voters believe Labour will increase capital gains tax, whilst 56pc expect it to put up inheritance tax.

Sir Keir insisted that “none of our plans require tax rises over and above the ones we have set out” in the manifesto published last week.

However, he also refused to rule out future hikes in council tax, insisting that he would not “write the budgets for the next five years” now.

The Labour manifesto already includes plans to launch tax raids on private school fees, overseas property owners, non-doms, energy giants and private equity investors.

Jeremy Hunt, the Chancellor, told The Telegraph: “Keir Starmer has let slip Labour’s true plans - to raise taxes across the board.

“Under pressure, Starmer has finally made it clear that Labour would raise taxes on millions of hardworking people who they don’t deem to meet their narrow and misguided definition of ‘working’.

“Be in no doubt that their £38.5 billion spending blackhole and £2,094 tax bombshell would only be the tip of the iceberg for a Labour government.”

Rishi Sunak warned on Tuesday night that “raising tax is in Labour’s DNA” whereas he is on a “moral mission” to bring down the burden on people “at every stage of life”.

“As Conservatives, we believe in lower taxes because people, not governments, make the best decisions about how to spend their money,” the Prime Minister said.

“That’s the choice at this election – lower taxes with the Conservatives or a £2,094 tax hike under Labour that would hammer working families hardest.”

Iain Duncan Smith, speaking
Sir Iain Duncan Smith said Sir Keir Starmer had made 'a big admission' - Carl Court/Getty

Sir Iain Duncan Smith, a former Tory leader, added: “Those who generate wealth, who work hard, who are successful, who add huge value to the British economy - they are his targets for higher taxation.

“If you have savings, if you own a home, if you own wealth, you are going to get walloped. That is a big admission.

“His levelling up isn’t levelling up, it’s levelling down. The old socialist in there who supported Jeremy Corbyn is still alive and well.”

Sir Keir’s comments come after Wes Streeting, the shadow health secretary, said that Labour defined working people as those who are “on lower middle incomes”.

The Tories claimed that his remarks suggested the opposition party is planning tax hikes on anyone earning over the median salary of £35,000.

Bim Afolami, the Economic Secretary to the Treasury said the comments revealed “who the targets are for Labour’s £2,094 of tax rises because of the black hole in their plans.”

Mr Streeting, one of Sir Keir’s closest allies, last week opened the door to higher spending by saying the manifesto was not the “sum total” of Labour’s ambitions.

On Tuesday it emerged that a group of Labour MPs have produced a dossier calling for six new tax rises to raise £60billion.

The proposals from the party’s Tribune group – of which Sir Keir is a member – set out increases to inheritance tax, capital gains taxes and a new “jackpot” levy on the super-rich

Labour insisted Sir Keir “had nothing to do” with the dossier which was not Labour policy.

The party has faced growing questions over its position on possible tax rises after it decided to rule some out but not others.

As well as the commitments on income tax, national insurance and VAT, Sir Keir was last week forced to also rule out extending capital gains tax to the sale of family homes after pressure from the Tories.

But he has repeatedly refused to rule out a wider capital gains raid on individuals and businesses which is being called for by some of his shadow cabinet.

Rachel Reeves, the shadow chancellor, has separately not ruled out increases to inheritance tax, such as by scrapping reliefs for farmers and business owners.

The party’s position on council tax is unclear after senior figures contradicted each other over whether it is ruling out changes to the current system of bands.

A Labour spokesman said: “The Conservatives have raised taxes to a 70-year high.

“Jeremy Hunt has admitted the Conservatives’ tax cuts are completely unfunded and will risk putting mortgages up again by £4,800. It’s time for change.”