No 10 climbs down on PM’s claim stocks and shares owners not ‘working people’

Sir Keir Starmer does not think all owners of stocks and shares fall outside his definition of “working people”, Downing Street has signalled.

The Prime Minister had suggested asset owners would not fall within his conception of what a working person is.

The Government has been asked repeatedly to define this term, in a bid establish which taxes may rise in the Budget.

Labour’s manifesto said the party would not increase taxes on working people, including VAT, national insurance, and income tax.

During a broadcast interview at a Commonwealth summit in Samoa, Sir Keir told Sky News that he does not consider people who have an income from assets such as shares of property to be working people.

The hint at who falls outside the scope of Sir Keir’s definition could point to where tax rises might come from in the Budget.

Among the levies which are reportedly under consideration for a hike are capital gains tax, inheritance tax, and fuel duty.

In a partial climbdown on Sir Keir’s position, Downing Street later clarified that people who hold a small amount of savings in stocks and shares still count as working people.

The Prime Minister’s official spokesman said Sir Keir meant someone who primarily gets their income from assets in his interview.

The continuing row over ministers’ definition of working people came as the Chancellor signalled she would rewrite the way Government debt is measured in her first Budget.

During a round of broadcast interviews while attending the International Monetary Fund meeting in Washington DC, Rachel Reeves said she faced difficult choices but insisted her Budget would “begin to fix the NHS and start to rebuild our economy”.

The cost of Government borrowing increased in response to speculation the Chancellor would change debt rules to spend billions more on investments.

Tory former chancellor Jeremy Hunt said increased borrowing could increase the cost of mortgages for hundreds of thousands of households.

Ms Reeves confirmed a technical change in the way she would measure progress against the target of managing debt.

Writing in the Financial Times, Ms Reeves said her fiscal rules would be “the rock of stability at the core of my Budget”.

Labour’s 2024 election manifesto said Ms Reeves would follow two rules: The current budget would be in balance so that day-to-day costs are met by revenues.

The second rule is that debt must be falling as a share of the economy by the fifth year of the economic forecast.

Ms Reeves said: “My fiscal rules will do two things. The first and most important: my stability rule will mean that day-to-day spending will be matched by revenues.

“Given the state of the public finances and the need to invest in our public services, this rule will bite hardest.

“Alongside tough decisions on spending and welfare, that means taxes will need to rise to ensure this rule is met. I will always protect working people when I make these choices, while taking a balanced approach.

“Crucially, my stability rule will also cover the interest on our national debt and unlike the previous government I won’t cut capital budgets to make up for shortfalls in the day-to-day running costs of departments.

“My second fiscal rule, the investment rule, will get debt falling as a proportion of our economy.

“That will make space for increased investment in the fabric of our economy, and ensure we don’t see the falls in public sector investment that were planned under the last government.”

Ms Reeves is expected to target public sector net financial liabilities (PSNFL) as her new benchmark for government debt rather than the current measure of underlying public sector net debt.

A shift to PSNFL would give her greater headroom to meet her debt reduction target, because it includes a wider mix of state assets and liabilities – notably including expected student loan repayments to offset some of the liability.