Britons face the prospect of tax increases no matter who wins the Labour leadership contest, as stark figures revealed a surge in government borrowing. The public sector borrowed £24.3 billion last month, the highest April figure on record outside the COVID-19 pandemic peak.
Borrowing Soars Amid Iran Crisis
Spending vastly exceeded revenues as the Iran crisis pushed the cost of servicing the UK's debt mountain to £10.3 billion—nearly a billion pounds more than a year ago. The Office for National Statistics (ONS) reported that borrowing in April 2025 was substantially higher than in April 2024, despite increased receipts, due to higher spending on benefits and other costs.
Labour Leadership Contest Fuels Tax Debate
The grim economic picture emerged as Labour hopefuls pitch to the party's left wing in the race to succeed Keir Starmer. Wes Streeting ignited controversy by calling for a 'wealth tax' on income from shares and investments. Economists warned this could actually reduce tax revenue rather than raise the £12 billion he claims.
Andy Burnham has previously supported an increase in the top rate of tax. However, even without a change in Number 10, there is growing concern that taxes will need to rise again to balance the books. Chancellor Rachel Reeves has already pushed the tax burden to an unprecedented peak.
Government Defends Fiscal Strategy
Chief Secretary to the Treasury Lucy Rigby stated: 'Earlier this week the International Monetary Fund agreed we had the right economic plan to reduce the deficit. We are cutting borrowing and debt—with our actions reducing government borrowing by over £20 billion last year—while driving growth through £120 billion of additional capital investment over the Parliament.'
She added: 'Working families have benefited from falls in inflation and cuts to interest rates—and our non-negotiable fiscal rules will be all the more important to continue to protect them as we face the consequences of the war that we have played no part in.'
ONS Chief Economist Grant Fitzner noted: 'Borrowing this month was substantially higher than in April last year and although receipts increased compared with April 2025, this was more than offset by higher spending on benefits and other costs. Borrowing for the latest full financial year was revised down slightly, and on a comparable basis remains the lowest since the year ending March 2020.'
