LONDON: Britain’s Prime Minister Keir Starmer on Monday defended “tough decisions” over taxes and public spending set to be unveiled in his Labour party’s maiden budget this week.

The center-left government, elected in July, has pledged to claw back what it says is a £22-billion ($28.6 billion) black hole in public finances inherited from the previous Conservative government.

Starmer confirmed that the October 30 budget will raise taxes and call for more borrowing to “drive long-term growth”. “I will defend our tough decision all day long,” he said at a speech in the West Midlands, in central England.

“Nobody wants higher taxes, just like nobody wants public spending cuts, but we have to be realistic about where we are as a country,” he added. Starmer said that the government faces “unprecedented challenges” amid crumbling public services and the poor state of public finances left by the previous government’s 14 years in office. The speech also revealed a couple more ideas of what to expect from Wednesday’s budget.

The prime minister said £240 million will be allocated to roll-out local services to help people get back to work. The UK is “the only G7 country that has higher levels of economic inactivity now than before the pandemic”, he explained. Starmer also announced that the cap on bus fares will be raised to £3 until the end of 2025, up from the £2 until the end of this year. “This is an economic plan that will change the long-term trajectory on British growth for the better,” he insisted.

In the speech on Monday, he doubled down on Labour’s promise to avoid a return to austerity and to avoid hiking taxes on “working people”—which would rule out increases to national insurance. However to meet this promise, he has confirmed that other taxes will need to rise.

Finance Minister Rachel Reeves is expected to raise employers’—rather than employee—contributions by at least one percentage point in the budget. Critics have warned the move could force both small and large businesses to limit hiring and pay rises. Labour politicians have also increasingly found themselves under pressure to define the term “working people” as the opposition Conservatives have 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. With increases in income tax ruled out, changes to capital gains tax, inheritance tax and fuel duty are among the levies Reeves could target. – AFP