Screen grab of Prime Minister Sir Keir Starmer speaking during Prime Minister’s Questions in the House of Commons, London. Picture date: Wednesday May 21, 2025. PA Photo. See PA story POLITICS PMQs . Photo credit should read: House of Commons/UK Parliament/PA Wire[/caption]
SIR KEIR Starmer refused to rule out a more new tax rises today – after it was claimed his deputy Angela Rayner is “clearly calling the shots”.
The Prime Minister came under fire in a heated Commons bust-up after the Labour number two sent a secret money-raising memo to the Chancellor.
Sir Keir Starmer refused to rule out MORE tax rises at PMQs today[/caption]
Tory leader Kemi Badenoch called on the PM to rule out the tax hikes to take place at the Budget in the autumn after the bombshell note leaked.
She said: “As if we haven’t suffered enough. People out there are struggling. Businesses are struggling. People are losing their jobs. We cannot have more tax rises. Will the Prime Minister rule out new tax rises this year?”
She added: “He didn’t rule it out that his cabinet is open warfare. The Deputy Prime Minister clearly calling the shots.
“What is it that we’ve learned we’re heading for new tax rises. We know inflation is up. It’s just more and more bad news from a Prime Minister who has lost control.”
She added that Ms Rayner was on “manoeuvres”.
The PM refused to rule out the tax hikes during as he revealed more pensioners will be able to claim winter fuel allowance at the Budget.
The row comes after a secret memo by Angela Rayner has been sent to the Chancellor calling for punishing new tax raids.
The deputy PM has put forward proposals for EIGHT new tax hikes in a bid to raise taxes by at least £3 billion to £4 billion a year some policies were uncosted.
The leaking of the note is likely to be seen as a threat to Rachel Reeves’ authority at running the economy calling for tax increases rather than spending cuts to salvage the nation’s finances.
What tax rises did Angela Rayner ask for and what would they mean?
- Raising Corporation Tax on Banks:
- Increasing the tax rate on banks would mean higher levies on their profits. This could generate additional revenue for the government but might lead to banks passing on costs to consumers via higher fees or reduced lending. It could also affect the competitiveness of UK banks internationally.
- Extending the Threshold Freeze for the 45% Tax Rate:
- Freezing the threshold for the 45% income tax rate would pull more people into the higher tax bracket over time as wages increase. This measure is often seen as a “stealth tax,” as it raises government revenue without explicitly increasing tax rates. It would primarily affect high earners.
- Scrapping the Tax-Free Allowance on Dividends:
- Removing the tax-free allowance on dividends would mean investors, including small shareholders, would pay tax on all dividend income. This measure could discourage investment in UK companies and impact individuals relying on dividend income, particularly retirees.
- Reinstating the Lifetime Pensions Allowance:
- Reintroducing the cap on how much can be saved into pensions before higher tax rates apply would limit the tax advantages of pension savings for high earners. This could reduce incentives for long-term savings but generate additional tax revenue. It would primarily impact wealthier individuals with large pension pots.
It also highlights a split at the top of government ahead of the Autumn budget following tensions amid the end of universal winter fuel payments and also disability benefits.
But Environment Secretary Steve Reed said the Cabinet was “united” on its tax and spend policies.
He told the BBC: “You wouldn’t expect me to comment on leaks and speculation.
But I know from being in the Cabinet when the discussions happen that the Cabinet is united.”
Welfare Secretary Liz Kendall also insisted that the “entire Cabinet backs Rachel’s economic strategy”.
But left-wing MPs rallied round the proposals outlined in the secret memo.
Labour backbencher Neil Duncan-Jordan said the government should “absolutely” should be looked at.
He told the BBC Radio 4 Today programme: “There is a very healthy debate inside the Labour Party at the moment about how we should be raising additional funds rather than cutting benefits and there is a menu, I think, of options that we should be using and these are just some of those.”
Plans put forward include new money-raising raids on the million people who pay the additional rate of income tax and also altering rules on dividend taxes, The Telegraph reported.
Other measures to be considered look at reinstating the pensions lifetime allowance which was just over £1 million before higher taxes kicked in.
Another suggestion was for banks to pay higher corporation tax levels.
Shadow Chancellor Mel Stride said: “This confirms that we are still living with the Labour Party of Jeremy Corbyn.
“At the very highest level, Labour ministers are debating which taxes to increase next.”
He added: “The Chancellor has repeatedly refused to rule out another tax raid in the autumn and now we know why – Labour’s top brass, including the Deputy Prime Minister, want to come back for more.”
Whitehall insiders said they welcomed contributions from colleagues at the top of government but all tax and spend policies were a matter for the Chancellor.
A Government spokesperson said: “We don’t comment on leaks.”
