Squirming Treasury minister Darren Jones has insisted Labour is not undermining trust in politics by claiming they have protected “working people” in the Budget.
Chancellor Rachel Reeves hiked taxes by £40 billion, with the majority coming through increases in employer national insurance contributions.
Ms Reeves has admitted it will hit workers’ pay and critics have warned employers may have to consider cutting thousands of staff.
But Labour has sparked fresh fury this morning (Friday) by insisting they had still had protected “working people” from tax hikes in the Budget.
Sky News host Wilfred Frost blasted: “The Chancellor said wage increases might be slightly less than they otherwise would have been.
“De facto, that is clearly a hit on working people.
“Paul Johnson of the IFS said the continued pretence that these changes will not affect working people risks further undermining trust.”
Mr Jones, the Chief Secretary to the Treasury, fired back: “The Treasury, which sets tax rates, is not increasing the rate of tax on working people.
“That was the promise we made.”
Asked if the Budget hits working people, Mr Jones said: “We completely respect the OBR’s assessment.
“The OBR has predicted that in future years, wage growth may become lower as a consequence of employers having to pay more.”
Challenged again over whether it hits working people, the Chief Secretary to the Treasury finally admits: “Yes.”
And Mr Frost then says: “I come back to this point, if you were trying to avoid that, are not continuing to undermine trust?”
Mr Jones then rambled: “No, because the promise in the manifesto was not to increase the rate of tax that employees pay on their pay slip.”
The Sky News presented furiously responded: “That was not the promise in the manifesto. That’s what you’re now making.
“We’ve all read the manifesto.”
Trying to defend Labour’s position, the Cabinet minister says: “It says that we make a promise to working people.
“That’s people who go to work and get a pay slip, that we will not increase income tax or national insurance.”
But Mr Frost continued: “Hold on, you just said the phrase in the manifesto was ‘working people’. You’ve just acknowledged to me, yes, it hits working people.
“You’re then adding this caveat. Did payslips get mentioned in the manifesto?
“You’ve just quoted it to me.”
But the Treasury minister continued: “We’ve honoured the commitment not to increase the tax rate on working people.
“If we’d have broken that promise, what would it have looked like?”
As the clash continued, Mr Frost asked: “Did the manifesto say we will not put up the tax rate on working people?
“No, it didn’t. It said we will not put up the National Insurance contribution.
“Working people was in the comment before that.”
The Budget increased state spending by almost £70 billion per year, a little over 2% of gross domestic product (GDP), funded by increased taxes, which Ms Reeves has admitted will hit workers pay, and borrowing.
Business leaders warned that hundreds of thousands of jobs will be lost while economists said the national insurance rise was a “tax on working people”.
And market jitters over the Chancellor’s plan for a massive borrowing binge sent the cost of government debt up.
Labour has tried to blame the tax hikes on a £22 bn black hole in the public finances.
Tories claimed the Budget amounts an extra £2,237 in tax for the average working household a year.
The analysis showed that over the next five years it would mean a total tax bill of over £9,700.
Choices made by the Chancellor will see the overall tax burden reach a record 38.3% of gross domestic product (GDP) in 2027-28, the highest since 1948.
The Office for Budget Responsibility (OBR) forecasts that by 2026-27, some 76% of the total cost of the NICs increase is passed on through lower real wages – a combination of a squeeze on pay rises and increased prices.
The measure could also lead to the equivalent of around 50,000 average-hour jobs being lost, the watchdog said.