Tight-lipped Starmer fuels speculation over wealth tax

Sir Keir Starmer has failed to rule out extending “stealth taxes” - as well as the introduction of a wealth tax - as his government struggles to balance the books following his recent U-turns.

- DAVID MADDOX, MILLIE COOKE

The prime minister reiterated that Labour would stick to its manifesto pledge and ruled out increases to income tax, VAT and national insurance, but he did not confirm whether the government was planning to lift the freeze on income tax thresholds in 2028.

Sir Keir and chancellor Rachel Reeves are seeking to find billions of pounds in savings after the government's recent U-turns on welfare and winter fuel payments left a black hole in the nation's finances, while a report out this week from the Office for Budget Responsibility gave a damning verdict of the state of Britain's “vulnerable” public finances.

Asked by Conservative leader Kemi Badenoch whether he could guarantee he would keep the manifesto pledge of not increasing income tax, VAT or employee national insurance contributions, Sir Keir gave a one word answer: "Yes!"

But when she asked if it is still the government's policy to unfreeze income tax thresholds, Sir Keir said: “No prime minister is going to write the Budget in advance, but we are absolutely fixed on our fiscal rules.”

At the last Budget, Ms Reeves promised to end the freeze on income tax thresholds after 2028. But if it were extended to the end of the parliament it could raise £9bn-10bn a year, according to the Institute for Fiscal Studies think tank, as workers are dragged into higher tax bands as earnings rise.