‘Painful’ Budget is needed for ‘long-term good’, says Prime Minister

In a speech in the Downing Street rose garden, the Prime Minister claimed his Government has done more in seven weeks than the Conservative government did in seven years.

But he warned “things are worse than we ever imagined” because of a £22 billion “black hole” in the public finances, claiming to have found out last week that the Tories had borrowed almost £5 billion more than the Office for Budget Responsibility expected.

Sir Keir also claimed his Government has inherited a “societal black hole” made worse by recent rioting, and said his decisions to release some prisoners early and means-test the pensioners’ winter fuel allowance are “tough actions” needed to fix the country’s foundations.

He said: “There is a Budget coming in October, and it’s going to be painful. We have no other choice, given the situation that we’re in.

“Those with the broadest shoulders should bear the heavier burden, and that’s why we’re cracking down on non-doms.

“Those who made the mess should have to do their bit to clean it up – that’s why we’re strengthening the powers of the water regulator and backing tough fines on the water companies that let sewage flood our rivers, lakes and seas.

“But, just as when I responded to the riots, I’ll have to turn to the country and make big asks of you as well, to accept short-term pain for long-term good, the difficult trade-off for the genuine solution.

“And I know that, after all that you have been through, that is a really big ask and really difficult to hear. That is not the position we should be in. It’s not the position I want to be in, but we have to end the politics of the easy answer – that solves nothing.”

The Prime Minister said he was “not going to pre-empt the Budget” when pressed on what tax rises and spending decisions the Government is considering to announce on October 30, although he reiterated his pledge on the “triple lock for working people”.

“We were being honest about the situation before the election, we set out very clearly what we would be doing with tax rises,” he said.

“I made it clear on numerous occasions that national insurance, VAT and income tax would not go up, the triple lock for working people, and that remains the position.

“I also set out that our plans were fully funded and fully costed. What I did not expect was a £22 billion black hole.”

Sir Keir denied his remarks were “performative”, adding: “I didn’t want to have to deal with the winter fuel allowance for pensioners… We have to fix the NHS, we have to fix our homes, our schools, and pensioners rely on them in the same way as everybody else does, so I’m not going to pre-empt the Budget, but I am absolutely not going to accept that the inheritance that we have is anything other than dire – a £22 billion black hole.”

He used his speech to claim the Government had to undertake daily checks on the number of prison places to “make sure we could arrest, charge and prosecute people quickly” during the recent riots.

“That’s disgraceful,” he said. “No prime minister should ever be in that position when trying to deal with disorder. That’s what we inherited, that’s what we will fix.”

Pressed further on his Government’s tax and spend plans, Sir Keir told reporters: “We have to get away from this idea that the only levers that can be pulled are more taxes or more spending. Our number one mission is to grow the economy to make sure we are creating the money in the first place – that remains the number one mission, nothing knocks that mission.

“And that’s why it’s really important we have a transport system that works, that’s why it’s really important we have an NHS capable of getting through the backlog, that’s why it’s important we have the national wealth fund, Great British Energy, that we unlock planning so that we can get on.

“All of those decisions are decisions we’ve taken in the first seven weeks to make sure we get the economy where we need it, but we’re going to have to take tough decisions.”

Conservative leadership candidate Kemi Badenoch, who serves as shadow housing secretary, said: “Keir Starmer is taking the British public for fools, but his dishonest analysis won’t wash. He campaigned on promises he couldn’t deliver and now he is being found out.”

Former minister Robert Jenrick, who is also a Tory leadership candidate, accused Sir Keir of “shamelessly attempting to rewrite history” and having “laid the groundwork for huge tax rises”.

Outgoing Conservative Party leader Rishi Sunak wrote on X: “Keir Starmer’s speech today was the clearest indication of what Labour has been planning to do all along – raise your taxes.”

Green Party co-leader Carla Denyer said: “Enduring more economic pain and hardship isn’t what people voted for. They were told they were voting for change, not voting for things to get worse before they get better.

“Labour needs to be honest about the fact that they could choose to make things better for everyone if they were bolder and braver.”