Labour’s Definition of ‘Working People’ for Budget Tax Pledge

The government has committed to not increasing taxes for “working people” in the upcoming Budget on Wednesday. However, as the Budget approaches, the precise meaning of this term, who Chancellor Rachel Reeves intends to safeguard, and who might face unexpected tax changes remains undefined. This raises the question of how Labour ministers have characterized a “working person.” On Monday, Sir Keir stated that the UK’s working population “know exactly who they are,” promising to “protect their payslips.” The previous week, he elaborated on this, describing a working person as someone who “goes out and earns their living, usually paid in a sort of monthly cheque” and who is unable to “write a cheque to get out of difficulties.” Last week, Sir Keir was questioned on whether individuals who work but also receive supplementary income from assets like shares or property would be considered “working people.” He responded that such individuals “wouldn’t come within my definition.” Subsequently, Sir Keir’s spokesman clarified that individuals possessing a “small amount of savings” could still be categorized as working people, suggesting this might encompass cash savings or stocks and shares held within a tax-free Individual Savings Account (ISA). Chancellor Rachel Reeves presented an alternative definition, characterizing working people as “strivers who graft.” In her column for The Sun on Sunday, she stated that her Budget was intended for “hardworking families up and down the country who have been crying out for change.” She further declared, “To these people I say, I’ve got your back. This is your Budget. I will deliver for you. It’s a Budget for the strivers.” Reeves has asserted that increasing National Insurance (NI) contributions paid by employers would not violate Labour’s commitment to safeguard “working people,” even if the affected business is small. However, it is arguable that an increase in employers’ contributions could ultimately impact working people. Paul Johnson, director of the Institute for Fiscal Studies think tank, has indicated that an increase in National Insurance paid by employers would constitute a “straightforward breach” of the government’s manifesto commitment, citing that the manifesto did not explicitly differentiate between employer and employee NI. Treasury Minister James Murray informed the BBC’s Nick Robinson on BBC Radio 4’s Today programme that “Working people are people who go out to work for their income.” When repeatedly questioned about whether landlords or individuals with shares would be included in this category, Murray responded, “I’m not going to get into too many hypotheticals here, Nick.” He further explained, “We’re talking about where people get their income from,” adding that ministers aim to protect individuals who “get their income from work.” Education Secretary Bridget Phillipson was posed the question: “Why are people who run businesses not working people?” She refrained from stating whether she considered business owners to be working people. Speaking on the BBC’s Sunday with Laura Kuenssberg, she defined “working people” as individuals whose primary income is derived from “going out to work.” Phillipson further stated that “working people will not see higher taxes in the wage slips that they receive” subsequent to the Budget. When questioned by Sky News regarding the inclusion of landlords as working people, senior minister Pat McFadden remarked, “I don’t think it’s about definitions of this job, that job, some income level where if you earn a pound more than that you’re not a working person.” He also did not directly answer whether business owners or landlords were considered working people. Speaking to the BBC, he explained, “When we talk about people, we refer to the promises that we made in the manifesto around the taxes and wages that people pay. They won’t go up when the chancellor gets to her feet on Wednesday.” He further clarified that “working people” does not constitute a “definition of wages.” Irrespective of the definition of “working people,” former Bank of England governor Mervyn King contends that the consequences of a substantial tax increase will remain consistent. He proposed that if businesses encounter higher taxes, they would consequently be less inclined to generate new employment opportunities and raise wages. He informed Sky News, “Ultimately, they fall on the amount that people can spend, and you only can raise significant amounts of money by raising taxes on most people, however you care to define that, but most people will have to pay higher taxes.”