Prime Minister's savers 'own goal' threatens UK investment

Gaffe: Keir Starmer has been accused of a ‘huge own goal’

Keir Starmer has been accused of a ‘huge own goal’ after declaring that anyone who owns shares is not a ‘working person’ – sparking fears they will be hammered with higher taxes in the Budget.

The Prime Minister faced a backlash from the City after saying savers and investors who receive income from the stock market ‘wouldn’t come within my definition’ of a worker.

The comments fuelled fears over what Rachel Reeves will announce in next week’s Budget given Labour’s manifesto pledge that it would ‘not increase taxes on working people’.

Ministers are coming under increasing scrutiny over who qualifies as a ‘working person’ – and who the Chancellor plans to hit with tax rises worth as much as £35billion.

Starmer and Reeves were last night warned an attack on share owners – from business founders to families saving for retirement – would undermine investment and harm the economy.

The PM’s comments were seen as particularly ill-judged after he last week held an investment summit to drum up support.

There are signs the threat of higher taxes – including capital gains tax on share sales – is already driving investors and entrepreneurs overseas.

Alasdair Haynes, founder and CEO of challenger stock exchange Aquis, branded the comments ‘dangerous’.

‘It’s an amazing comment to make after an investment summit which seemed to be a great success,’ he said.

‘We need more people to own shares in this country, not less, otherwise Labour are not going to finance their growth strategy.

‘Growth, growth, growth is what they talk about but in order to do that you have to have shareholders to invest and finance that growth. It is a huge own goal.

‘Saying you’re going to tax people who own shares is dangerous. It is very worrying indeed.’

No 10 scrambled to clarify that those with small savings did count as working people. But having ruled out increases in income tax, national insurance and VAT, Reeves is struggling to make her Budget numbers add up.

The Chancellor looks set to target areas such as capital gains tax (CGT) and inheritance tax for revenue as well as national insurance on employer contributions to private sector pensions.

It is also feared a CGT hike will discourage entrepreneurs to set up businesses. Richard Bernstein, director of investor Crystal Amber, said: ‘Founders of businesses often work 60-plus hours a week and have the stress and responsibilities of employing people.’ Experts warned it was wrong to suggest share ownership was the preserve of entrepreneurs or the rich.

Andy Butcher, a financial planner at wealth manager Raymond James, said: ‘In the UK, investing is seen as the domain of the wealthy. This is a harmful view.’

Noting that ‘the Government’s commitment not to raise taxes on working people was always going to come unstuck’, Tom Selby of broker AJ Bell said hiking CGT ‘will undoubtedly affect many working people and reduce the rewards for investing – potentially undermining the Government’s wider ambition to drive economic growth’.

And Susannah Streeter of Hargreaves Lansdown said: ‘If ordinary people invested more in stock markets, they not only have a greater chance to build their financial resilience, but their money will also be channelled into UK assets, helping companies get access to funding to grow.’

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