Chancellor Rachel Reeves has made a significant announcement ahead of Wednesday’s budget, stating that there will be no tax increases for working people. This statement has raised questions about who exactly falls under this category. The Labour Government, led by Chancellor Reeves, has committed to protecting the earnings of “working people,” but there seems to be ambiguity surrounding the definition of this group.
Prime Minister Keir Starmer attempted to shed light on the definition by stating that a working person is someone who earns their income through labour and does not rely on sources such as investments in shares or property. However, there were conflicting statements from the Prime Minister’s spokesperson, suggesting that individuals with modest savings could still be considered working people.
In her article for the Sun on Sunday, Rachel Reeves described working people as “strivers who graft” and assured them that the upcoming budget would cater to hardworking families. Treasury Minister James Murray emphasised that working people are those who earn their income through work, distinguishing them from those who derive income from other sources.
Education Secretary Bridget Phillipson echoed similar sentiments, stating that working people primarily rely on income earned through employment. The issue of whether business owners and landlords fall under the category of working people remains unclear, with differing opinions within the Government.
Despite the assurance that National Insurance contributions for employers will not impact working people, concerns have been raised about the broader implications of tax policies on businesses and individuals. Former Bank of England governor Mervyn King cautioned that significant tax increases could constrain spending and hinder job creation.
As the debate continues, it is evident that the definition and protection of working people will have far-reaching implications on the economy and society at large. With the budget announcement looming, both policymakers and the public await further clarity on how tax policies will impact different segments of the population.