BRITONS will suffer an onslaught of “painful” decisions in the Autumn Budget, Sir Keir Starmer warned today.
In a major speech, the Prime Minister laid the groundwork for a sweeping tax crackdown as he insisted households must suffer “short-term pain” for the “long-term benefit” of the economy.
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Sir Keir Starmer warned of a “painful” Autumn Budget in a major speech in the Rose Garden today No10Credit: Getty
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The Prime Minister hinted at sweeping tax raids as he warned that Britons would have to suffer “short-term pain” before the economy improves Credit: EPA
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Rachel Reeves to announce brutal budget on October 30 Credit: Reuters
Speaking from the sun-drenched Rose Garden no. 10, the Prime Minister claimed that “things are worse than we could ever have imagined”.
Sir Keir said: “The Budget is coming in October and it will be painful.
“We have no other choice, given the situation we are in.
Those with the broadest shoulders should bear a greater burden, and that is why we deal with non-natives.
The Prime Minister has blasted the Tories for destroying the economy as he vowed to fix the “rot” that is blighting public services and growth.
He promised to plug a £22 billion black hole in the exchequer by creating an economy that “works for everyone”.
Sir Keir insisted wealth creation was his government’s “number one priority”.
But he added that before the economy improves, life will be worse and that “compromises” in the October 30 budget will be key to getting Britain back on its feet.
Predictions for the fall statement
The Sun’s head of consumer Tara Evans reveals the top predictions for the autumn statement:
Winter fuel payment
Chancellor Rachel Reeves has already announced that winter fuel payments will be limited to those in receipt of pension credit and certain benefits. The allowance is worth up to £300 a year and is currently available to anyone over State Pension age and those on certain benefits.
No increase in some taxes
Keir Starmer has promised there will be no increase in National Insurance, Income Tax, Corporation Tax or VAT as part of Labour’s election manifesto.
Inheritance tax
Chancellor Racheal Reeves is expected to change Inheritance Tax rates or thresholds. One suggestion is to potentially shorten the pre-death gifting period for tax exemption.
Pensions
Pensions featured very highly in the king’s speech, was that a hint of how high on the agenda it would be in the budget? Experts say there are a number of options, including reintroducing a lifetime allowance cap. Ms Reeves previously campaigned to cut the tax relief higher earners receive on their pensions and instead introduce a flat rate of 33%. Another possible option is to change the rules around pensions and inheritance tax.
Capital Gains Tax (CGT)
There is speculation that the £3,000 tax-free allowance could be scrapped or that CGT could be extended to other assets.
Business prices
There are rumors of reforms to support small businesses, which would probably be based on land values.
Fuel duty
A possible increase in fuel tax, the lifting of the freeze from 2011 and the impact on household costs. The Sun has been supporting motorists as part of its Keep It Down campaign since early 2011.
Addressing an audience of nurses, teachers, firefighters and small business bosses, Sir Keir said: “Just like when I responded to the riots, I will have to turn to the country and also make big demands on you, to accept short-term pain for long-term good, a difficult substitute for the right solution.
“That’s not the position we should be in.
“It’s not a position I want to be in, but we have to end the politics of the easy answer, which doesn’t solve anything.”
I won’t let mindless thugs run riot – crime has consequences and I’m getting tough, Keir Starmer vows
The prime minister repeated his election campaign promise that he would not increase income tax, national insurance or VAT.
But he strongly hinted that other levies are not so certain.
Capital gains and inheritance tax are among those Chancellor Rachel Reeves has announced an attack on.
Analysis
Jack Elsom, The Sun’s chief political correspondent
It was a hot morning when Sir Keir Starmer rushed up to the podium in the garden of number 10 shortly after 10 o’clock.
“Sun, no rain, no wind,” he smiled.
But that’s where the good news stopped, because the economic prospects he came to bring were far from sunny.
At the heart of this speech was a heartfelt warning to families that hard times lie ahead and that the nine-week budget will be brutal.
“The budget is coming in October and it’s going to be painful,” he grimaced.
In other words, tax increases and possibly even spending cuts to fill the £22 billion black hole they inherited, Labor claims.
It leaves Starmer in a tight spot both economically and politically.
After excluding any increase in income tax, VAT, national insurance and corporation tax, it ruled out around 80 per cent of all possible revenue increases.
That will force his chancellor, Rachel Reeves, to look for other levers to pull, while staying within her firm fiscal rules – ie to reduce borrowing.
This almost certainly indicates an increase in capital gains tax, inheritance tax, an attack on pension benefits and possibly other levies.
Politically, many families may feel a little resentful of being asked to tighten their belts while public sector workers, such as junior doctors and train drivers, have received big pay rises.
And where was all that doom and gloom during the election?
Many people have repeatedly asked Labour, including the Prime Minister, whether taxes will have to rise.
Starmer claims the blame lies squarely with the Tories for wrecking the finances and “hiding” how bad they are.
They will have to hope that families across the country will buy it as they prepare for a tough winter.
Sir Keir said: “We were honest about the situation before the election, we set out very clearly what we were going to do with the tax increase.
“What I didn’t expect was a £22 billion black hole.”
Sir Keir added that he was not afraid of making “unpopular decisions”, such as ending the winter fuel allowance for pensioners.
Speaking about the controversial move, he said: “We have taken the difficult decision to fix the public finances so that everyone benefits in the long term, including pensioners.
“Now it is a difficult compromise and there will be more.
“I’m not going to shy away from making unpopular decisions now, if it’s the right thing for the country in the long run, that’s what official government is all about.”
The prime minister described how the poor state of public finances became dangerously apparent during the far-right riots.
Sir Keir recalled that ministers had to constantly check whether there would even be enough space to lock up youths as a lack of funding left cells full to the brim.
He said: “Every day of that riot, literally every day, we had to check the exact number of prison places and where those places were to make sure we could quickly arrest, charge and prosecute people.
“Not having enough prison places is a fundamental failure that can happen, and these people who were throwing rocks, burning cars, making threats, didn’t just know the system was broken, they were betting on it, playing it.
“They thought, ‘Ah, they will never arrest me, and if they do, I won’t be prosecuted, and if I am, I won’t get a big fine.’
“They saw cracks in our society after 14 years of failure and exploited them.
“That’s what we inherited. Not just an economic black hole, a social black hole and that’s why we have to act and do things differently.”
Responding to the speech, Shadow Chief Secretary to the Treasury Laura Trott accused the government of breaking long-held promises not to raise taxes.
She said: “The Government is no longer promising to protect workers from their incoming tax attacks because just like pensioners, working families are next in line for Labour’s tax hikes.
“After making more than 50 election promises not to raise taxes on working people, Labor is now trying to break even more promises.
“The chancellor has the right to raise taxes to pay for her expensive elections above and beyond the inflationary pay rises demanded by her union stewards, but she should have had the courage to be honest from the start.
“This is a betrayal of the people’s trust and we will hold them accountable for their actions.”
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