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Sir Keir Starmer has confirmed there will be tax rises in the budget to prevent a “devastating return to austerity” and rebuild public services.
In a speech in Birmingham, the prime minister also announced the £2 bus fare cap will rise to £3, while £240m will be injected into efforts to get people back to work.
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It follows weeks of speculation on how the government plans to grow the economy and close a £40bn blackhole in the nation’s finances when it delivers its first fiscal statement on Wednesday.
Giving a teaser of what is to come, Sir Keir said: “It is time to embrace the harsh light of fiscal reality.
“Stability to prevent chaos. Borrowing will drive long term growth. Tax rises to prevent austerity and rebuild public services.”
Sir Keir did not specify what tax rises would be included, but it is widely expected that employer national insurance will go up, alongside possible increases to capital gains and inheritance tax.
Ministers have been facing repeated questions about the government’s definition of “working people”, after Labour’s election manifesto pledged not to increase taxes on working people – explicitly ruling out a rise in VAT, national insurance and income tax.
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What is likely to be in the budget?
PM denies ‘waging war against middle Britain’
Facing down critics, the prime minister said a return to austerity would be “devastating” and “disastrous”.
“This is not 1997 when the economy was decent, but public services were on their knees.
“And it’s not 2010 where public services were strong, but the public…
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