LONDON, Oct 28, 2024 (BSS/AFP) - Prime Minister Keir Starmer will on Monday pledge that his government's first budget will put Britain on a path to growth and stability amid a furious row about whether his Labour Party "lied" to voters about hiking taxes before they were elected.

The administration, in power since July, has spent weeks warning of "painful" decisions over taxes and public spending due to what it says is a o22 billion ($28.5 billion) black hole in the country's finances left by the last Conservative government.

In a speech Monday, Starmer will say the last conservative government covered up the state of public finances and crumbling public services, his office said.

"We have to be realistic about where we are as a country... These are unprecedented circumstances," he will say, pledging to protect "working people" from tax rises.

"It is working people who pay the price when their government fails to deliver economic stability. They've had enough of slow growth, stagnant living standards and crumbling public services," he will say.

"This is an economic plan that will change the long-term trajectory on British growth for the better."

Starmer told reporters at the end of a Commonwealth nations summit in Samoa on Saturday that Labour had been "clear in the manifesto and in the (election) campaign that we wouldn't be increasing taxes on working people".

He added "we intend to keep the promises that we made in our manifesto".

But the opposition Conservatives accused the government of concealing their intention to increase taxes ahead of the election.

"I think what Labour did is mislead the public during the election campaign. They essentially lied to the British public," Chris Philp, a member of the Conservatives top team, told ITV News.

"They said that their plans did not require any tax increases above the relatively limited number set out in their manifesto and it turns out that was completely untrue," he added.

- 'Working people' -

Labour's election manifesto said it would not raise taxes on "working people", explicitly ruling out increases to various taxes including national insurance.

Chancellor Rachel Reeves, however, is now expected to raise employers' -- rather than employee -- contributions by at least one percentage point in the budget.

The government has insisted this does not mean it has broken a manifesto commitment.

"What I am saying is that when people look at their pay slips, they will not see higher taxes," Education Secretary Bridget Phillipson told the BBC.

But critics say small businesses taking a hit will inevitably have an impact on workers as firms will likely limit hiring and pay rises.

"Raising employer NICs (National Insurance contributions) is a jobs tax that is paid by working people. Not only will it harm businesses, it will also mean fewer jobs and lower wages," Conservative finance spokesman Jeremy Hunt said.

Ahead of Wednesday's budget, Labour politicians have increasingly found themselves under pressure to define the term "working people" and explain how its budget will square with manifesto commitments.

The prime minister told Sky News he did not consider people who have an income from assets such as shares or property to be "working people", paving the way for potential tax rises on income acquired that way.
"They wouldn't come within my definition," he said.

In a partial climbdown on Friday, his office clarified that people with a small amount of savings in shares still counted as working people.

With increases in income tax ruled out, changes to capital gaiBSS/AFP/FI/ 0824 hrs