‘They know who they’re’: Keir Starmer provides one other determined non-definition of ‘working folks’ forward of Budget tax raid as ministers squirm on whether or not small enterprise homeowners rely

Keir Starmer had another go at defining ‘working people’ today – saying they ‘know who they are’.

The PM tried to draw a line under months of confusion about who falls into the category in a speech ahead of the Budget tax raid. 

The Labour election manifesto used the term as it laid out who would be protected from increases. 

But Sir Keir sparked fury last week by suggesting landlords, shareholders and savers did not count.

Education Secretary Bridget Phillipson struggled yesterday on whether small business owners making just £13,000 a year were ‘working people’.

And the premier said this morning that ‘the working people of this country know exactly who they are’, saying the government would operate in their ‘service’. 

The Chancellor’s revenue-raising measures are expected to include an increase in national insurance paid by employers.

That has led to furious claims of a breach of the party’s manifesto promises and prompted fears that significant extra costs for businesses will stifle wage rises for workers.

Appearing on the BBC yesterday, Ms Phillipson insisted that working people will not see higher taxes ‘on their payslip’ as a result of Labour’s first Budget in 14 years.

But she refused to say whether Labour’s definition of ‘working people’ included those who run businesses.

The Tories claimed Labour ‘essentially lied to the British people’ over their tax plans.

Shadow science secretary Andrew Griffith compared Sir Keir Starmer‘s party to the ‘worst form of dodgy car hire firm’.

He accused Labour of ‘conjuring up small print that never existed’ over their promise not to hike national insurance.

Asked who Labour defined as a ‘working person’, Ms Phillipson told the 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.’

The Education Secretary failed to state whether a small business owner with an average net profit of around £13,000 would be considered a ‘working person’ by the Government.

‘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,’ she said.

‘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.’

As a Cabinet minister, Ms Phillipson earns around £160,000. Asked if she counts herself as a ‘working person’, she replied: ‘My income derives from my job and I’ll pay whatever taxes are required of me.’

Cabinet Office minister Pat McFadden argued this morning that detailed questions about who the pledge covered was ‘not the right way to look at this’. 

Asked about the row on BBC Radio 4’s Today programme, Mr McFadden said: ‘When we talked about working people we referred to the promises that we made in the manifesto around the taxes on wages that people pay, they won’t go up when the Chancellor gets to her feet on Wednesday.’

Pushed further on the question of whether small business owners are working people, he said: ‘I don’t think it’s about the definition of wages, it’s about keeping your promises, and we will keep our promises when the Budget takes place on Wednesday.’

Pressed again whether landlords are classed as working people, Mr McFadden said: ‘I honestly think this thing about income levels and job descriptions is not the right way to look at this. The right way to look at this is will we stick to the manifesto promises that we made on tax? And we will, and you’ll see that when the Chancellor gets to her feet.’

Ms Phillipson had earlier sparked alarm when she declined to say whether Labour’s pledge not to raise income tax, VAT or national insurance would remain in place for the next five years.

Ms Phillipson told 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.’

But Downing Street sources swiftly scrambled to clarify, as a manifesto commitment, the tax pledge would apply for the whole parliament.

Former Bank of England governor Mervyn King described Labour’s pledge on national insurance, VAT and income tax as ‘very unwise’.

He also said the debate around not putting up taxes on working people was a ‘terrible illusion’ and warned putting up employers’ national insurance was likely to depress workers’ salaries.

Lord King told Sky News: ‘All this debate about not putting up taxes on working people is a terrible illusion, really.

‘Taxes are paid by people, they’re not paid by companies or institutions, 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 it’s most people will have to pay higher taxes.

‘And if they, instead of unwinding the cuts in employees’ national insurance contributions, put up employers’ national insurance contributions, that will make it less likely that companies will exceed to wage demands, they will press down on that, they will probably be less enthusiastic about creating new jobs.

‘Ultimately, the impact of these higher taxes has to be on the consumption of most people, however you care to define that group.’

Lord King also warned that Ms Reeves’ expected Budget plans could have an impact on interest rates.

The Chancellor is set to rewrite the Government’s fiscal rules to allow her to increase borrowing for public investment by around £50billion.

Asked if he thinks the expected plans may have an impact on interest rates, particularly mortgage rates now, Lord King said: ‘It could do, it could do.

‘Certainly if you borrow more, it doesn’t matter how you dress it up in terms of a different fiscal rule, people know that higher borrowing means higher borrowing. 

‘And financial markets and people who lend to the Government will demand a slightly higher interest rate to compensate for the higher amount of debt that they’re being asked to finance.

‘It doesn’t have to be dramatic, but it certainly will put some upward pressure on long-term interest rates. I don’t think it necessarily affects what the Bank of England does today or even next year, but it certainly will have some upward pressure.’