Kemi Badenoch and Sir Keir Starmer have clashed over a cabinet minister’s assurance that individuals with “modest” incomes will be shielded from impending tax increases.
Transport Secretary Heidi Alexander initially made this pledge during a Sunday interview, discussing potential tax adjustments in the upcoming autumn Budget.
Since then, government ministers have faced scrutiny and ambiguity when pressed to define the scope of “modest” incomes.
During Prime Minister’s Questions, Conservative leader Badenoch asserted that Sir Keir “doesn’t know” the answer to this critical question.
The prime minister defended the government’s performance, accusing the Conservatives of presiding over “stagnant” economic growth for 14 years.
Labour’s election manifesto pledged to protect “working people” from tax hikes—an assurance that dominated discussions leading up to last year’s Budget, as ministers struggled to articulate a clear definition.
On Sunday, Alexander further complicated the issue by suggesting in a Sky News interview that “people on modest incomes, working people” would be exempt from tax increases this time.
During PMQs, Badenoch urged Sir Keir to “clear up the confusion,” noting that ministers “seem incapable of explaining who is in that category.”
In response, the prime minister stated that the government was “fixing the country” for “the sort of people that work hard but haven’t necessarily got the savings to buy themselves out of problems.”
“That’s who we’re working for, and that’s why we put the national living wage up, that’s an extra £1,400,” he added.
The government is widely anticipated to raise taxes in the autumn Budget, influenced by lackluster economic figures and policy reversals on welfare cuts, which have made it challenging to meet self-imposed spending targets.
Ministers have repeatedly emphasized they cannot predetermine the Budget, while simultaneously promising not to increase major revenue-generating taxes before the next general election.
These include income tax rates, VAT (a sales tax), and corporation tax (levied on company profits).
Labour also pledged not to raise National Insurance—prompting a dispute last autumn when it announced an increase in employer contributions.
This situation may lead to a prolonged period of scrutiny as ministers face persistent questions about potential tax increases in other areas.
Recent reports suggest ministers are considering freezing income tax thresholds beyond the 2028 date set by the previous government, potentially pushing more individuals into higher tax brackets as their incomes rise.
Ministers are also facing pressure from some Labour backbenchers to consider implementing additional wealth taxes.
During PMQs, Badenoch accused the government of “considering taxing” pension contributions, although she did not elaborate on this claim.
Labour ministers have previously offered various definitions of who qualifies for tax protection as a “working person.”
Prior to last autumn’s Budget, the prime minister stated that the category included those who “go out and earn their living” and cannot “write a cheque to get out of difficulties.”
He added that individuals with additional income from assets, such as shares or property, would not fall under his definition.
His spokesperson later clarified that those with a “small amount of savings” could qualify under the prime minister’s definition, including individuals holding stocks and shares in a tax-free Individual Savings Account (ISA).
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