Prime Minister Sir Keir Starmer has insisted his government's Budget "asked everybody to make a contribution" to safeguard essential public services and support families grappling with the ongoing cost of living crisis.
The defence comes after Chancellor Rachel Reeves unveiled a financial plan that places Britain on track for a record tax burden, implementing £26 billion in tax increases. This move was prompted by weaker-than-expected economic forecasts that created significant shortfalls in the government's initial spending proposals.
Defending the Tax Rises
Sir Keir argued that his administration had taken the "least possible" action to affect citizens and had done so in a "fair way." The Prime Minister directly addressed criticism that the decision to abolish the controversial two-child benefit cap—a measure that will cost £3 billion a year by 2029/30—was a recent move designed to appease rebellious Labour MPs.
"It's impossible to argue that this is a position that has been adopted just in the last few weeks. It is my long-standing ambition," Sir Keir told Sky News. "I'm proud to be the Prime Minister who has done more on child poverty than any prime minister ever."
He vehemently refused to apologise for a policy that will lift an estimated 450,000 children out of poverty, highlighting the "massive impact" and describing the previous Tory policy as "abhorrent."
Where the Tax Increases Fell
After abandoning a more substantial income tax rise, Chancellor Reeves instead opted for a series of smaller tax measures. These include:
- A new pay-per-mile tax for electric vehicles
- Increased taxes on online betting
- A so-called "mansion tax" on properties valued over £2 million
However, the government faces accusations of breaking its key election promise not to raise taxes on working people. This stems from the decision to freeze income tax thresholds until 2030/31 and to levy national insurance on some pension contributions.
The threshold freeze is projected to have significant consequences. By the 2029/30 tax year, it will result in:
- 780,000 more basic-rate taxpayers
- 920,000 more higher-rate taxpayers
- 4,000 more additional-rate taxpayers
This occurs as rising earnings over time push more people into higher tax brackets, with the 20% rate starting at £12,570, the 40% rate at £50,271, and the 45% band at £125,140.
Responding to Manifesto Concerns
When questioned by the BBC on whether Labour had breached its manifesto commitment, Sir Keir acknowledged that "everybody" had been asked to contribute, including the working people the party had pledged to protect.
He pointed to the necessity of funding the NHS and ensuring schools are "fit for the future" as the primary reasons for the widespread contribution. The Prime Minister also cited "a number of headwinds which weren't expected" over the past year, referencing the Office for Budget Responsibility's (OBR) downgraded growth forecasts for 2026 through 2029.
However, he highlighted a positive revision, noting that growth for this year was upgraded to 1.5% from a forecast of 1%—a 50% increase. "Growth was predicted at 2025 at 1%, the figures came in yesterday, it is 1.5%," Sir Keir stated. "That is significantly more."
Meanwhile, Chancellor Reeves maintained that taxes were being kept at an "absolute minimum on ordinary working people." She defiantly told critics, "You're not going to write my obituary today," denying that she was hiking workers' taxes specifically to fund a rising welfare bill.
In contrast, Tory shadow chancellor Sir Mel Stride criticised Labour's measures as "very poor," claiming they would "lead to 25,000 more people going on to benefits as a direct consequence of making them more attractive."
