Starmer warns the public to prepare for tax increases in the Budget to pay for public services

Sir Keir Starmer is determined to prepare the country for significant tax hike in this week’s budget – a warning that the only alternative is to cut government services.

The Prime Minister will promise to protect “working people” but will also issue a stark warning that he and the Chancellor have chosen higher taxes rather than spending cuts or a massive increase in borrowing as a way to balance the balance of his government’s first budget. will be delivered on Wednesday.

Labor MPs will simultaneously seek to reassure businesses that the party can be trusted with the economy, I can show when meeting with executives to emphasize that aides are focused on helping ministers drive growth.

But leading economists, opposition MPs and business leaders warn that poorly targeted tax rises will harm the economy. how do they define these workers which they say will not face a financial hit.

Speaking in the Midlands on Monday, Starmer is expected to tell voters “slow growth, stagnant living standards and collapsing public services are enough”, adding: “They know austerity is not the answer. And they witnessed chaos as politicians allowed borrowing to get out of control.”

He will make it clear that balancing the public finances in the budget will be a top priority, despite changes to borrowing rules that will allow Rachel Reeves to finance long-term investments with new debt. The Prime Minister will say: “Politics is always a choice. It’s time to set a clear path and face the harsh light of financial reality so we can come together to develop a credible long-term plan. It’s time for us to make tough decisions because ignoring them has set us on a path to decline.”

And in the clearest sign yet that the government has chosen to raise taxes rather than cut spending, Sir Keir adds: “If people want to criticize the path we’re taking, that’s their prerogative. But then let them set out a different direction. If they think the government has become too big, let them tell workers what public services they would cut. If they don’t think our long-term investment in infrastructure is necessary, let them explain to working people how they will grow the economy for them.”

The budget, which will be based on the theme “stability, investment, reform”, will see the £2 cap on all bus fares scrapped after the Department for Transport concluded the policy was not good value for money. .

But it is also expected that military personnel will be exempted from having to pay VAT on private school fees, in recognition of the difficulties faced by military families who have to move home frequently.

Ross Kempsell, a Conservative peer who campaigned on the issue, said: “I am very encouraged by rumors that the Government is considering exempting military families from VAT at independent schools. This is vital for families involved in operations who rely on boarding school places to ensure continuity of education.”

Voters support increased investment

A majority of voters backed plans to increase fiscal investment, which will support Rachel Reeves as she seeks to maximize growth without destabilizing markets.

The chancellor confirmed she would change her self-imposed budget rules, which limit the amount of money she can borrow to fund longer-term infrastructure projects.

A YouGov poll last week shows 64 per cent of the public believe investment cuts planned by the previous Conservative government would harm the British economy.

The survey found that the majority of those who voted for Labor in the general election expect more investment now that the party is in power, another sign of support for Reeves.

MPs also support a change in approach to public finances, with 59 percent saying current borrowing rules are harming long-term economic growth, according to the Survation poll.

Tom Railton, director of the Invest in Britain campaign, which commissioned both studies, said I: “Voters expect more public investment and Labor MPs know it is key to the economic growth they were elected to deliver. The budget is key for the chancellor. It must ensure that its new fiscal rules lead to the level of public investment that the country needs.”

Labor MPs will today hold an event for business leaders to try to reassure them that the party is united on the need to boost private sector investment in the UK despite a looming tax hike.

Co-chair Josh Simons said. I: “We know businesses have been frustrated by previous governments being distracted from their pursuit of growth by self-interested supporters. Today we make it clear that an era is over.”

And vice-chairman Chris Curtis added: “The reason we are doing this is to make it clear to business in no uncertain terms that the days when government was thrown off course by backbenchers having a party before the country is over.”

Mervyn King, the former Governor of the Bank of England, said ministers were “very unwise” in promising not to increase income tax, national insurance, VAT and corporation tax – the Treasury’s four biggest sources of revenue. He told Sky News the budget could lead to higher borrowing costs, despite Reeves’ commitment to fiscal orthodoxy.

And Paul Johnson of the Institute for Fiscal Studies said public services would still feel “squeezed” even after “one of the biggest tax budgets ever”.

Gareth Davies, the Conservative shadow finance minister, said: “Labour looks set to break its manifesto promises on Wednesday. Even though they have ruled out any changes to fiscal rules, they are now fudging the numbers to increase borrowing and are planning to raise taxes on working people.”