Sir Keir Starmer has warned Brits to expect a “painful” Budget this autumn as he insisted the state of the public finances is “worse than we ever imagined”.
The Prime Minister addressed the nation from the No10 Rose Garden as he cautioned voters his government’s first fiscal statement would be “short-term pain for long-term good”.
Speaking in Downing Street this morning, Sir Keir said: “There’s a Budget coming in October and it’s going to be painful. We have no other choice, given the situation we’re in.
“So those with the broadest shoulders should bear the heavier burden. That’s why we’re cracking down on non-doms.”
“Frankly – things will get worse before they get better,” he added.
The Prime Minister said that since coming into office, his ministers have uncovered a £22bn black hole in the public finances, of which the Office for Budget Responsibility (OBR) was unaware.
Read more
Experts react to Reeves: The finances might be worse than expected – but tax hikes are still coming
Chancellor Rachel Reeves has announced her first Budget will take place on Wednesday, October 30, with the latest OBR economic outlook revealed on the same day.
And Treasury sources are aleady adamant hard choices are ahead, with reports Reeves is planning to raise taxes, cut spending and get tough on benefits when she stands at the despatch box, the Guardian reported.
Keir Starmer’s warning came despite his pledge that: “Growth – and, frankly by that I do mean wealth creation – is the number one priority of this Labour government.”
But the former director of public prosecutions also stressed that he would have to “turn to the country and make big asks of you as well”.
People would need to “accept short term pain for long term good [and] the difficult trade-off for the genuine solution,” he outlined.
“I know that after all you’ve been through, that is a really big ask and really difficult to hear,” he added.
“That is not the position we should be in. It’s not the position I want to be in. But we have to end the politics of the easy answer that solves nothing.”
The Prime Minister was quizzed by broadcasters on his and Reeves’ plans for tax rises, and whether homeowners, shareholders and big business would be expected to contribute more.
Keir Starmer insisted his pledge during the election campaign not to increase National Insurance, VAT and income tax “remains the position” but admitted “tough decisions” would be required.
The speech, Starmer’s first to make use of the iconic location, was attended by a small crowd of “familiar faces” the Prime Minister met during the election campaign.
“I promised this government would serve people like you,” he said. “Apprentices. Teachers. Nurses. Small business owners. Firefighters… This is a government for you.”
Referencing the Partygate saga which saw Boris Johnson forced to resign, he vowed: “A garden and a building that were once used for lockdown parties.
“Remember the pictures just over there, of the wine and the food? Well this garden and this building are now back in your service.”
In response, Laura Trott, shadow chief secretary to the Treasury, criticised Labour for “rolling the pitch to break even more promises” calling the move “a betrayal of people’s trust”.
She said: “The government are no longer promising to protect working people from their incoming tax raid because just like pensioners, working families are next in line for Labour’s tax hikes.
“The Chancellor is entitled to raise taxes to pay for her expensive choices and above inflation pay rises demanded by her union paymasters, but she should have had the courage to be honest from the start.”
While Tory leadership contender Kemi Badenoch, shadow housing, communities and local government secretary, commented: “Starmer is taking the British public for fools, but his dishonest analysis won’t wash.
“He campaigned on promises he couldn’t deliver and now he is being found out… the truth is that Keir Starmer is managing voters’ expectations for a decade of decline.”
And John O’Connell, TaxPayers’ Alliance CEO, suggested Starmer “talks about ‘fixing the foundations’ and yet is whistling the same old tune of managed decline that has plagued Britain for decades”.
He advised: “If this new Labour government is genuinely committed to wealth creation as it claims, it should avoid hiking the very taxes that so ruthlessly crush economic growth, particularly capital gains tax.”