Starmer accused of ‘opening the door’ to tax and borrowing changes in Budget

Sir Keir Starmer has been accused of considering raising employer national insurance contributions and changing borrowing rules after he failed to rule out either proposal.

The Prime Minister was repeatedly urged by Conservative Party leader Rishi Sunak to clarify his position amid reports that Chancellor Rachel Reeves is eyeing up ways to unlock billions of pounds for additional spending.

After Sir Keir said he would not be drawn on such matters ahead of the Budget on October 30, Mr Sunak claimed his successor in Downing Street had “opened the door” to raising employer national insurance including on pensions and “fiddling the figures” to ensure more can be borrowed.

Commitment

At the general election, Labour said it would not increase taxes on working people and included a commitment not to increase national insurance, income tax or VAT.

The party also outlined its fiscal rules to ensure it balanced day-to-day costs with revenues and getting debt falling as a share of the economy by the fifth year of forecasts.

Reports have suggested Ms Reeves has been considering whether to use a different debt measure to the one she inherited from the previous Tory government.

Speaking at Prime Minister’s Questions, Mr Sunak mocked Sir Keir over the ousting of Sue Gray as his chief of staff before switching attention to the economy.

The former prime minister said: “I know that not everything or everyone has survived his first 100 days in Government, so can he confirm that when he promised not to raise income tax, national insurance or VAT, that commitment applies to both employer and employee national insurance contributions?”

Sir Keir replied: “We made an absolute commitment in relation to not raising tax on working people.

“He, of course, was the expert’s expert on raising taxes. What did we get in return for it? We got a broken economy, broken public services, and a £22 billion black hole in the economy. We’re here to stabilise the economy, and we will do so.”

Promise

Mr Sunak said he did not think Labour donor Lord Waheed Alli was “buying any of that nonsense”, adding: “I’m not asking about the Budget, I’m asking specifically about the promise he made to the British people.

“So let me ask him again, just to clarify his own promise. Does his commitment not to raise national insurance apply to both employee and employer national insurance contributions?”

Sir Keir replied: “We set out our promises in our manifesto. We were returned with a huge majority to change the country for the better, and I stick to my promises in the manifesto.”

Mr Sunak joked in reply: “When it comes to his answer on tax, businesses across the country will have found his answer just about as reassuring as Sue Gray did when he promised to protect her job.”

Turning attention to fiscal rules, Mr Sunak said: “Before the election his Chancellor said changing the debt target in the fiscal rules would be tantamount to fiddling the figures.

“Does he still agree with the Chancellor?”

The Prime Minister said: “This is literally the man who was in charge of the economy, 14 years they’ve crashed the economy. What did they leave? A £22 billion black hole in the economy.

“Unlike them we won’t walk past it. We will fix it. And it’s only because we are stabilising the economy that we are getting the investment into this country.”

‘Suspicion’

Mr Sunak continued to press on the issue, saying: “As the Institute for Fiscal Studies has said, it’s hard to escape the suspicion that the Government is attracted to this change because it would allow for significantly more borrowing.

“Now his Chancellor previously said that this change, and I quote, her words, would be, ‘fiddling the figures’. So it is a simple question: does he still agree with the Chancellor?”

Sir Keir replied: “I see he’s back to his old script they’ve never had it so good, that didn’t work so well at the election. It might be time to change that.

“I’m not going to get drawn on issues on the Budget, just as he wouldn’t when he was standing at this despatch box.”

Mr Sunak countered: “It is clear he’s opened the door to raising employer national insurance contributions, including on pensions, and fiddling the figures that he can borrow more.

“And he talks about what he’s achieved, well, economic confidence is plummeting, growth is now stalling and the UK’s borrowing costs are rising on his watch.”

‘Fire and rehire’

Earlier in the exchanges, Mr Sunak joked Sir Keir is a “convert to fire and rehire” as he referred to Ms Gray’s departure as chief of staff just three months after Labour came to power.

Ms Gray said she was “pleased to have accepted a new role as the Prime Minister’s envoy for the regions and nations”.

Mr Sunak said: “Tomorrow the Government will publish their anticipated changes to employment law, given the weekend’s events, when did the Prime Minister first become a convert to fire and rehire?”

Sir Keir responded: “I’m very pleased and proud that tomorrow we will publish the Bill which will be the biggest upgrade of workers’ rights in a generation.

“And that’ll do two things, firstly, it will give people basic dignity at work, and secondly, it will help grow our economy, something that the last government absolutely failed on for 14 long years.”