Chancellor Rachel Reeves has described Prime Minister Sir Keir Starmer as a “working person” amidst ongoing questions about tax rises expected in the upcoming Budget. As the Government faces pressure to define who qualifies as a “working person” and would be exempt from tax hikes, Reeves emphasised Starmer’s income source from working for the country.
Labour’s manifesto pledged not to increase taxes on working individuals, which has led to scrutiny over the criteria for this classification. In a recent interview at a Commonwealth summit, Starmer indicated that those with income from assets like shares or property may not fit his definition of a working person, potentially hinting at areas where tax rises could be implemented.
There has been speculation about potential tax increases on capital gains, inheritance, and fuel duty. Clarifications from Downing Street suggest that individuals with modest savings in stocks and shares would still be considered working people. Treasury Minister James Murray highlighted that the focus should be on where individuals derive their income, particularly from work.
Reeves has confirmed plans to revise how government debt is calculated in her forthcoming Budget, aiming to maintain fiscal stability while allowing for increased investment. The shift in debt measurement methods could provide more flexibility in meeting debt reduction targets by incorporating a broader range of state assets and liabilities.
In her Budget, Reeves is expected to adhere to two key fiscal rules focusing on balancing the current budget and reducing debt as a share of the economy. Tough decisions on spending, welfare, and tax increases are anticipated to achieve these goals. The reassessment of debt metrics aims to offer a more comprehensive view of government liabilities, potentially affecting areas such as student loan repayments.