Labour minister gives budget update on impacts on savings, income tax, VAT and national insurance

A Labour minister has given a budget update after being asked about key issues people are concerned about - including potential impacts on savings, income tax, VAT or national insurance. Education Secretary Bridget Phillipson appeared on a number of different TV shows this morning on the BBC and Sky and promised the UK’s “best days are ahead of us” as she said the Budget would seek to “invest in the long-term prosperity of our country”.

Ms Phillipson told Sky News’s Sunday Morning With Trevor Phillips programme: “We face some tough choices but we need to restore stability back to the economy.” She added: “But the choice of this Budget is, ‘do we invest in the long-term prosperity of our country, or do we accept we’re on a path to decline?’ “I think our best days as a country are ahead of us, and this Budget will fix those foundations so that we can get our country back on track.”

In terms of a definition, a working person is someone “whose main income arises from the fact that they go out to work every day”, she said. “What we’re talking about here is people whose main income arises from the fact that they go out to work every day,” the Education Secretary told Sky News’s Sunday Morning With Trevor Phillips programme.

Asked whether the pledge not to hike taxes on the money such people earn extends to their savings, she said: “You’re once again asking me to speculate on matters that are for the Chancellor, but we have set out that we want to ensure that people who work hard and get their main income from their jobs, that they get protection and support.”

Ms Phillipson has said education is a crucial part of how Labour can “fix those foundations”, ahead of the Budget on Wednesday. Speaking to Sunday Morning With Trevor Phillips on Sky News, the Education Secretary said: “There is an awful lot that we as a Government have already got under way.”

“In the little over the three months that I’ve been in post, we started a new programme of rolling out breakfast clubs for all of our primary schools, we are creating more nursery places in primary classrooms, we are investing in the early years, we’ve launched Skills England, we’re reforming the apprenticeship levy.

“Yes, it’s the Budget, but there is a lot more – and this is the change that people voted for, the change that I am determined to deliver, because education is a crucial part of how we fix those foundations, and there is no better place to start for our children’s futures,” she added.

Asked about the Chancellor’s plans to redefine national debt, Ms Phillipson said: “It’s a straightforward choice between investment or decline, and this Labour Government is on the side of investment.

“In making sure that we stop our schools crumbling, for one, that’s why in the Budget, we will be prioritising education priorities, so making sure we’re committed to rebuilding 100 schools (which) will get under way next year.”

Education Secretary Phillipson has declined to say whether Labour’s pledge not to raise income tax, VAT or national insurance will remain in place for the next five years. Asked if the pledge applied for the whole of this Parliament, Ms Phillipson told Sunday Morning With Trevor Phillips on Sky News: “We think taxes on working people are already too high, because that’s what they faced under the Conservatives.

“I can’t speculate on either this Budget or on successive budgets to come, you’ll understand that, and if I were to do that, I would get in a lot of trouble with Rachel Reeves, the Chancellor.”

Working people will not see higher taxes “on their payslip”, Ms Phillipson said, as she acknowledged people may be “frustrated” about ministers’ refusal to spell out the measures in the Budget ahead of Wednesday.

Repeatedly pressed on what Labour’s definition of a working person is, the Education Secretary told the BBC’s Sunday With Laura Kuenssberg programme: “You are inviting me to speculate about the nature of the question that you’re asking. What I’m saying is that when people look at their pay slips, they will not see higher taxes.”

She refused to say whether a small business owner with an average net profit of around £13,000 would be considered a “working person” by the Government. When the question was put to her, Ms Phillipson said: “Well, we can go through a range of different hypotheticals about who may or may not be captured by tax measures that may or may not happen in the Budget. When Rachel is sat here next weekend you can ask her about the measures that she’s announced.

“I know it’s frustrating ahead of the Budget that I can talk about some areas, but not all of it.” I appreciate your frustration. I would love to come and say ‘here’s all the measures line by line’, that’s not my job, however – that’s for the Chancellor.”

Asked whether she understood that viewers would be frustrated as well, Ms Phillipson said: “I can get that, and they haven’t got long to wait.” Former Bank of England governor Mervyn King said the Government appearing to box itself in by the pledge on national insurance, VAT and income tax is “very unwise”.

Lord King, when asked on Sky News’s Sunday Morning With Trevor Phillips programme if Labour was unwise to stick with those general election promises on tax, said: “Very unwise. I think the previous government was irresponsible to cut national insurance contributions when that was only remotely feasible, given unrealistic projections for public spending.

“And I think the Opposition didn’t need to make a commitment not to reverse that. And honestly, I think that would be much better now just to say to people, this is where we are, be completely straight with people say, yeah, we made that pledge in the heat of an electoral battle, it was a mistake, we regret it, and we’re going to unwind that.

“We’re going to put national insurance contributions back to where they were, because without that, we won’t have the money to support the NHS and other public services.”

He added the “big challenge” in the Budget “is to demonstrate that the amount (Chancellor Rachel Reeves) intends to borrow is compatible with a stable, falling debt-to-income ratio at the end of this Parliament”.