British Prime Minister Keir Starmer has hinted at possible tax increases in October’s budget, warning of “painful” decisions to address a huge £22bn ($29bn) gap in the public finances discovered after his government took office, the Guardian reported.
Starmer spoke of the major challenges facing his government in his first speech since becoming prime minister, admitting that it would take years to “clean up the mess” left by previous Conservative governments.
“There is a Budget coming up in October and it will be painful. We have no choice, given the situation we are in. Those with the broadest shoulders must bear the brunt, which is why we are fighting to abolish tax breaks for the rich,” he said in his speech, delivered in the Downing Street garden to 50 members of the public he met during his election campaign.
With a large financial gap in the public finances, Starmer warned that the financial situation that was discovered was much worse than expected, noting that the Office for Budget Responsibility (OBR) was not aware of this gap that was hidden by the Conservative Party that ran the previous government.
14 years of mold
“In the first weeks we discovered a £22 billion fiscal gap. And as of last Wednesday we discovered that the previous government had borrowed almost £5 billion more than the Office for Budget Responsibility had forecast over the past three months,” Starmer said.
He explained that among the measures that may be considered to bridge this gap is raising taxes on some categories such as capital gains tax and inheritance tax – according to what was reported by the BBC – while adhering to the strict financial restrictions set by the previous government.
For her part, Finance Minister Rachel Reeves confirmed that these expected increases aim to distribute the financial burden more fairly.
In a move that has angered some members of parliament from the ruling Labour Party, the government has decided to cancel winter fuel payments for about 10 million pensioners, according to Agence France-Presse.
However, Starmer defended the decision, saying: “This was one of the decisions we had to make.”
The BBC said the prime minister had backed out of a £40m ($53m) VIP helicopter contract signed by former prime minister Rishi Sunak during his tenure. Labour’s Starmer had promised to clean up “14 years of rot” under the Conservatives.
According to the Guardian, Starmer and his defence secretary, John Healey, have decided not to renew the helicopter transport contract, which is due to expire in December after being extended last year at Sunak’s personal insistence. He has used government-funded helicopters on several occasions, even when train travel was convenient, and has used them to travel to events in Southampton, Dover, the West Midlands and Essex.
Internal criticism
Despite efforts to justify these difficult decisions, the British government’s plans have drawn criticism from within the Labour Party.
Unite general secretary Sharon Graham described Starmer’s plans as “draconian”, saying it was “time to see the change that Labour promised”.
