Sir Keir Starmer is “rolling the pitch to break even more promises” and tax working families, the Tories have warned.
Paving the way for tax hikes, the Prime Minister admitted the upcoming October Budget will be “painful” for millions of Britons.
Sir Keir said Labor would stick to its general election promise not to increase income tax, National Insurance or VAT but he would not be drawn on which other levies could now be targeted for increases.
The Tories said Chancellor Rachel Reeves “should have had the courage to be honest from the start” about her plans.
And the TaxPayers' Alliance warned Sir Keir is “whistling the same old tune of managed decline”, adding that he should avoid tax increases “that so ruthlessly crush economic growth”.
Shadow Chief Secretary to the Treasury Laura Trott said: “The Government are no longer promising to protect working people from their incoming tax raid because just like pensioners, working families are next in line for Labour's tax hikes.
“After promising over 50 times in the election not to raise taxes on working people Labor are now rolling the pitch to break even more promises.
“The Chancellor is entitled to raise taxes to pay for her expensive choices and above inflation pay rises demanded by her union paymasters, but she should have had the courage to be honest from the start. This a betrayal of people's trust and we will hold them to account for their actions.”
In a speech in the Downing Street rose garden, the Prime Minister claimed his government has done more in seven weeks than the Conservative government did in seven years.
But he warned “things are worse than we ever imagined” because of a £22 billion “black hole” in the public finances, claiming to have found out last week that the Tories had borrowed almost £5 billion more than the Office for Budget Responsibility. expected.
Sir Keir said: “There is a Budget coming in October, and it's going to be painful. We have no other choice, given the situation that we're in.
“Those with the broadest shoulders should bear the heavier burden, and that's why we're cracking down on non-doms.
“Those who made the mess should have to do their bit to clean it up – that's why we're strengthening the powers of the water regulator and backing tough fines on the water companies that let sewage flood our rivers, lakes and seas.
“But, just as when I responded to the riots, I'll have to return to the country and make big asks of you as well, to accept short-term pain for long-term good, the difficult trade-off for the genuine solution.
“And I know that, after all that you have been through, that is a really big ask and really difficult to hear. That is not the position we should be in. It's not the position I want to be in, but we have to end the politics of the easy answer – that solves nothing.”
The Prime Minister said he was “not going to pre-empt the Budget” when pressed on what tax rises and spending decisions the government is considering to announce on October 30, although he reiterated his pledge on the “triple lock for working people”.
“We were being honest about the situation before the election, we set out very clearly what we would be doing with tax rises,” he said.
“I made it clear on numerous occasions that national insurance, VAT and income tax would not go up, the triple lock for working people, and that remains the position.
“I also set out that our plans were fully funded and fully costed. What I did not expect was a £22 billion black hole.”
Sir Keir denied his remarks were “performative”, adding: “I didn't want to have to deal with the winter fuel allowance for pensioners… We have to fix the NHS, we have to fix our homes, our schools, and pensioners rely on them in the same way as everybody else does, so I'm not going to pre-empt the Budget, but I am absolutely not going to accept that the inheritance that we have is anything other than dire – a £22 billion black hole.”
John O'Connell, chief executive of the TaxPayers' Alliance, said: “Taxpayers will be left disheartened and betrayed by Starmer's speech, which does nothing to help households who are already struggling under a 70 year high tax burden.
“The prime minister talks about 'fixing the foundations' and yet is whistling the same old tune of managed decline that has plagued Britain for decades.
“If this new Labor government is genuinely committed to wealth creation as it claims, it should avoid hiking the very taxes that so ruthlessly crush economic growth, particularly capital gains tax.”
Pressed further on his government's tax and spend plans, Sir Keir told reporters: “We have to get away from this idea that the only levers that can be pulled are more taxes or more spending. Our number one mission is to grow the economy to make sure we are creating the money in the first place – that remains the number one mission, nothing knocks that mission.
“And that's why it's really important we have a transport system that works, that's why it's really important we have an NHS capable of getting through the backlog, that's why it's important we have the national wealth fund, Great British Energy, that we unlock planning so that we can get on.
“All of those decisions are decisions we've taken in the first seven weeks to make sure we get the economy where we need it, but we're going to have to take tough decisions.”
Conservative leadership candidate Kemi Badenoch, who serves as shadow housing secretary, said: “Keir Starmer is taking the British public for fools, but his dishonest analysis won't wash. He campaigned on promises he couldn't deliver and now he is being found out.”