Brace for tough decisions but “better days ahead”, Starmer says

The prime minister has warned the country should get ready to face the "harsh light of fiscal reality" and promised that "better days are ahead" if we make the right choices now.

This morning (28 October), Starmer emphasised the "unprecedented" economic challenges facing the nation, in a speech ahead of Wednesday's budget announcement. But he also said his government will "run towards" these problems to tackle them head-on.

Chancellor Rachel Reeves is expected to announce a series of tax hikes to plug a claimed £22bn "hole" in the public finances left by the previous Conservative government.

This includes a controversial rise in national insurance contributions (NICs) paid by employers, which critics argue breaks Labour's manifesto pledge not to increase taxes on "working people".

What does "working people" actually mean?

Many people have questioned what exactly Labour means by "working people". Education secretary Bridget Phillipson clarified that it refers to those "whose main source of income is the income they earn from going out to work".

But economists say workers will ultimately bear the cost of the employer NICs hike, either through reduced pay rises or even job losses, as hiring becomes more expensive for businesses.

On top of this, the freeze on income tax thresholds is expected to drag more employees into paying higher tax rates.

Tories accuse Labour of "lying" over tax plans

The Conservatives have accused Labour of misleading voters during the election.

Shadow science secretary Andrew Griffith said Labour had come to power on "a false prospectus that things would be easy" and had "essentially lied to the British people in terms of their plans".

But Labour insist they will protect people's payslips from direct tax hikes and argue the difficult decisions are necessary because of the financial "inheritance" left by the Tories.

As Starmer said in his speech: "We choose a different path: honest, responsible, long-term decisions in the interests of working people."

Stay tuned

We’ll bring you updates on the budget announcements over the week and tell you how your money could be affected by the changes.