The ‘own goal’ of the Prime Minister’s savers threatens British investment

Keir Starmer has been accused of a “huge own goal” after declaring that anyone who owns shares is not a “working person”, sparking fears of 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 “would not fall within my definition” of a worker.

The comments fueled fears over what Rachel Reeves will announce in next week’s budget, given Labour’s manifesto that it would “not raise taxes on workers”.

Ministers are coming under increasing scrutiny over who qualifies as a “working person” and who the Chancellor plans to raise taxes worth up to £35bn.

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

The prime minister’s comments were seen as particularly reckless after he held an investment summit last week to drum up support.

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

Alasdair Haynes, founder and chief executive of stock exchange Aquis, called the comments “dangerous”.

“It’s a surprising comment after an investment summit that appeared to be a great success,” he said.

‘We need more people to own shares in this country, not fewer, otherwise Labor will not fund its growth strategy.

‘They talk about growth, growth, growth, but to achieve it it is necessary to have shareholders who invest and finance that growth. It’s a huge own goal.

‘Saying that people who own shares are going to be taxed is dangerous. “It is really very worrying.”

Number 10 was quick to clarify that those with small savings did count as workers. But having ruled out increases in income tax, national insurance and VAT, Reeves is struggling to make his budget figures add up.

It looks like the Chancellor will focus on areas such as capital gains tax (CGT) and inheritance tax on income, as well as national insurance on employer contributions to private sector pensions.

There are also fears that an increase in CGT will discourage entrepreneurs from setting up companies. Richard Bernstein, director at investor Crystal Amber, said: “Business founders often work more than 60 hours a week and have the stress and responsibilities of hiring people.” Experts warned that it was a mistake to suggest that stock ownership was the exclusive domain of businessmen or the wealthy.

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

Noting that “the Government’s commitment not to raise taxes on workers was always going to fail”, Tom Selby, of broker AJ Bell, said raising CGT “will undoubtedly hit many workers and reduce the rewards for investing, undermining potentially the Government’s broadest ambition. to boost economic growth.

And Susannah Streeter, of Hargreaves Lansdown, said: “If ordinary people invested more in the stock markets, not only would they have a better chance of developing their financial resilience, but their money would also be channeled into UK assets, helping companies to obtain access to financing to grow. .’