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Ahead of a tough budget this autumn, Labour has slammed the door on tax hikes to Income Tax, VAT or National Insurance, but warns UK families brace for challenging times. Prime Minister Keir Starmer outlined a dire fiscal landscape to the nation, gearing up for fresh policies to plug a daunting £22bn deficit in public accounts.
Addressing the nation from 10 Downing Street’s Rose Garden, PM Starmer implored citizens to endure ‘short-term pain for long-term good,’ lamenting the fiscal outlook as ‘worse than we ever feared’. Rioting has only added insult to injury, according to Sir Keir.
Prime Minister Starmer cautioned the public: “There is a budget coming in October, and it’s going to be painful. We have no other choice, given the situation that we’re in.”
Defending some of Labour’s more contentious decisions, such as the early release of certain prisoners and slashing winter fuel payments, he branded these ‘tough actions’ as unavoidable in the mission to repair Britain’s fragile fiscal framework.
As for balancing the books, Chancellor Rachel Reeves is poised to review various strategies, placing the fiscal load firmly on ‘those with the broadest shoulders’, a hint dropped by Sir Kier in Tuesday’s briefing, reports Birmingham Live.
Specific measures Labour will adopt to raise essential funds remain under wraps until the autumn budget, though a smattering of Labour’s cost-saving strategies have been made public.
Labour’s manifesto already includes a plan to slap VAT on private school fees, with the current exemption for educational organisations set to end. From January 2025, parents will see a 20% VAT charge added to the cost of private education.
In another significant move, Stamp Duty relief for first-time buyers is undergoing changes. Currently, they enjoy a Stamp Duty holiday on properties up to £425,000, but this threshold is scheduled to drop back to £300,000 in April 2025.
This means that from April, a first-time buyer purchasing a property at £425,000 will be hit with a Stamp Duty bill of £8,750.
Additionally, the Winter Fuel Allowance is facing cuts, impacting millions of state pensioners who will find themselves £300 out of pocket this winter. The new, tighter eligibility criteria require pensioners to be claiming another benefit to qualify for the allowance, which stands at £200 for most and £300 for those over 80.
Previously, all pensioners received this support to help with winter costs.
When pressed about his Government’s fiscal strategies, Sir Keir emphasised a shift in focus, telling journalists: “We have to get away from this idea that the only levers that can be pulled are more taxes or more spending. Our number one mission is to grow the economy to make sure we are creating the money in the first place that remains the number one mission, nothing knocks that mission.”
“And that’s why it’s really important we have a transport system that works, that’s why it’s really important we have an NHS capable of getting through the backlog, that’s why it’s important we have the national wealth fund, Great British Energy, that we unlock planning so that we can get on.”
“All of those decisions are decisions we’ve taken in the first seven weeks to make sure we get the economy where we need it, but we’re going to have to take tough decisions.”