Bus fares cap to increase to £3, Starmer confirms ahead of crucial Budget
The prime minister warned of the "harsh reality" ahead, as he prepared the nation for what's to come in the Budget, as ITV News' Political Correspondent Harry Horton brings the latest ahead of crucial Budget
The bus fares cap in England will be increased from £2 to £3 in Wednesday's Budget, Sir Keir Starmer has announced.
Speaking in Birmingham on Monday, the prime minister said the previous Tory government only funded the £2 bus cap until the end of 2024.
The new, higher cap of £3 will last until the end of 2025, he confirmed.
"The Tories only funded that until the end of 2024 and therefore that is the end of the funding in relation to a £2 capped fare," Starmer said on Monday.
“I do know how much this matters, particularly in rural communities where there’s heavy reliance on buses.
“And that’s why I’m able to say to you this morning that in the Budget we will announce there will be a £3 cap on bus fares to the end of 2025 because I know how important it is.”
On Monday, Tory leadership hopeful Robert Jenrick labelled the prime minister as "clueless" on X, saying "Starmer must think people who get the bus aren’t working people".
Also, former Labour leader Jeremy Corbyn described axing the £2 bus fare cap as "a disgraceful decision".
He said on X: "Scrapping the £2 bus fare cap is a disgraceful decision that will harm the poorest in society, and discourage public transport at a time when it is needed more than ever."Why is the government punishing people for trying to get to work?"
Starmer also said the Budget will be for "working people" and is designed to "prevent devastating austerity" for the UK's public services and finances.
Funding announced to help people return to work
Starmer said Chancellor Rachel Reeves will announce £240 million in funding to help people return to work.
“This Budget will get Britain working. It will pave the way for reforms that tackle the root causes for economic inactivity and make sure that those who can work do work," he said on Monday.
“As a Labour Government, we will always help those who cannot support themselves, but the UK is the only G7 country for whom inactivity is still higher than it was before Covid.
“And that’s not just bad for our economy, it’s also bad for all those who are locked out of opportunity.
He added that the "working people" in this country "know exactly who they are".
"They are the golden thread that runs through our agenda."
He said the chancellor's announcement will commit to "honest, responsible, long-term decisions in the interests of working people".
"It's stability that means we can invest, and reform that will maximise that investment.
"Stability, investment, reform. That's how we fix the NHS, rebuild Britain and protect working people’s payslips. Delivering on the mandate of change."
Looming tax rises
Starmer defended the imminent tax rises in Wednesday's budget, saying it will "prevent austerity and rebuild public services"
A series of tax hikes is expected, including an increase to employer national insurance by at least one percentage point.
“Borrowing will drive long-term growth. Tax rises will prevent austerity and rebuild public services. We choose to protect working people," he said.
"We choose to get the NHS back on its feet. We choose to fix the foundations, reject decline and rebuild our country with investment.”
Starmer warned of "unprecedented" economic challenges and invited the public to judge him on his ability to rise to them.
Referring to the statements announced by New Labour's Gordon Brown and austerity-era Conservative chancellor George Osborne, Starmer said: "We have to be realistic about where we are as a country. This is not 1997, when the economy was decent but public services were on their knees.
"And it's not 2010, where public services were strong, but the public finances were weak. These are unprecedented circumstances.
"And that's before we even get to the long-term challenges ignored for 14 years: an economy riddled with weakness on productivity and investment, a state that needs urgent modernisation to face down the challenge of a volatile world."
It comes amid opposition accusations of hypocrisy over an expected decision to extend a freeze on income tax thresholds introduced under the Tories, and confusion over the Labour government's use of the term "working people".
The party's manifesto promised no tax increases on working people, explicitly ruling out rises in VAT, national insurance, and income tax.
Sources have said the chancellor is seeking to find £40 billion in tax hikes.
Reeves has admitted she will raise some taxes, pointing to a £22 billion black hole in the public finances which ministers say was left behind by their Tory predecessors, but has not specified which ones.
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What else is expected in Wednesday's Budget?
There is expected to be a cut to the earnings threshold at which employers pay their national insurance contributions.
Combined with a hike in the rate of employer contributions, this is expected to raise around £20 billion as Reeves seeks to revive public services and put the economy on a firmer footing.
Some £1.4 billion has been announced already to rebuild crumbling schools, as well as a tripling of investment in free breakfast clubs, £1.8 billion for the expansion of government-funded childcare, and £44 million to support kinship and foster carers.
Though Starmer has vowed there will not be a return to austerity, Reeves is understood to have called on government departments to make efficiency savings of 2% in order to free up "billions" of pounds that would be reinvested in the front line.
The chancellor will also announce a change to the UK's debt rule that will open the door for the government to spend billions more on long-term infrastructure, such as replacing dilapidated buildings on the public sector estate.
She is expected to target public sector net financial liabilities (PSNFL) as her new measure of debt rather than the current yardstick of underlying public sector net debt.
A shift to PSNFL would give her greater headroom to meet her debt reduction target because it includes a wider mix of state assets and liabilities - notably including expected student loan repayments to offset some of the liability.
Sources have said the chancellor is seeking to find £40 billion in tax hikes and spending cuts in order to avoid a return to austerity in next Wednesday's fiscal statement.
Capital gains tax, inheritance tax and fuel duty are among some of the other levers she could pull to raise revenue.
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