Kemi Badenoch blasts Keir Starmer as she issues major tax warning

Kemi Badenoch has accused Sir Keir Starmer of "leaving a toxic legacy" for the next generation because of his handling of the economy. The Conservative Party leader warned that Sir Keir is "stuck in a doom loop" that is making the cost of living worse and will lead to tax rises at the autumn budget.

Mrs Badenoch insisted that the government needed to reduce borrowing and stop ballooning national debt. Writing in the Daily Express, she said: "Labour promised change, but all they've brought is change for the worse."

She continued: "The Prime Minister is now stuck in a doom loop that is making the cost of living worse for families across Britain.

"He is also operating entirely at the mercy of his left-wing backbench MPs. They didn't let him cut the ballooning welfare bill, and they're not going to let him cut other government spending."

The Tory leader added: "We also need real welfare reform: to help takers to become makers. This is something Labour are now clearly incapable of doing.

"And we need a government that stops borrowing more and more, piling billions onto the national debt and leaving a toxic legacy for the next generation.

"Only the Conservatives are talking seriously about doing these things. Labour just want to tax and borrow more. Reform are the same but with gimmicks and slogans. People want to be told the truth, not given more false promises."

Government borrowing in May surged to £17.7billion, official figures showed.

Britain's national debt stands at £2.9 trillion, according to the Office for National Statistics, up from £1.6 trillion a decade ago and £349bn at the turn of the century.

As a share of GDP, debt has risen from 32.4% in 2000 to 96.4% today.

Mrs Badenoch also warned that Chancellor Rachel Reeves risks dragging millions of working people into paying higher tax rates if she extends a freeze in personal allowance thresholds.

This means pensioners could pay tax on their state pensions for the first time, the leader of the Opposition said.

Ms Reeves pledged in last October's autumn budget not to extend the freeze as it would "hurt working people" and "take more money out of their payslips".

But earlier this month she refused to rule out a U-turn on the move after Labour's welfare climbdown left her with a £5 billion black hole in the public finances.

Mrs Badenoch said: "Last year, Rachel Reeves told MPs that she would unfreeze Personal Allowance thresholds because extending them would 'hurt working people'. Now ministers can't even say if this is still the Government's policy.

"Another freeze in tax thresholds wouldn't only drag millions of working people into paying higher tax rates, it also risks dragging pensioners into paying tax on their state pensions for the very first time.

"Conservatives warned at the last election that pensioners would face a Retirement Tax under Labour, now it looks like we were right."

Over-60s campaign group Silver Voices warned that extending the tax freeze would "follow in a list of betrayals of pensioners" since Labour took power.

A petition launched by the campaign group calling for the freeze on the tax-free personal allowance to be lifted to avoid dragging OAPs on modest incomes into the taxman's net has been signed by more than 125,000 people.

The full new state pension is set to exceed the frozen personal allowance of £12,570 by 2028 due to triple lock increases of at least 2.5% a year.

Dennis Reed, Silver Voices director, said: "It would be a cynical betrayal of promises to pensioners and working families if the lower tax threshold continues to be frozen.

"Hundreds of thousands of pensioners are already being sucked into the tax system each year as a result of this freeze on lower tax thresholds.

"Following up on our petition, signed by over 125,000 people, that the lower tax threshold should be raised immediately, I have asked for a meeting with a Treasury Minister to explain the serious impact on older people's living standards of the freeze.

"Once in the tax system, which the majority of pensioners now are, the state pension and the triple lock increases become taxable, reducing the value of this safety net year on year. "Extending the freeze would follow in a list of betrayals of pensioners since Labour took power: universal winter fuel payments, WASPI women, social care reform and now undermining the triple lock by stealth."

It comes after a Labour minister failed to rule out extending the income tax thresholds freeze.

The policy, which is often described as a "stealth tax", was introduced by the Tories in 2021 and was due to be lifted in April 2028.

Asked about whether the freeze would be extended at the autumn budget, Exchequer secretary to the Treasury James Murray told Sky News yesterday [FRI]: "This is what happens in the run up to budgets. There's lots of speculation about lots of different tax measures and you'll forgive me that I'm not going to get into that. What I can stick by is the commitment we made in the manifesto about not increasing income tax, national insurance and VAT on working people.

"There's a whole other range of questions about tax that you and other people in the media will ask me starting now right through until budget day I suspect.

"And the answer is always going to be the same, which is that the Chancellor makes these decisions in the round at budget day.

"Budget day hasn't even been set yet, we don't know what date the budget is going to be on. There will be a process to go through then the Chancellor takes all of the decisions about tax in the round."

The Tories seized on Mr Murray's failure to rule out continuing the freeze.

Shadow Financial Secretary Gareth Davies said: "Rachel Reeves said in the autumn that she would unfreeze personal allowance thresholds because extending it would 'hurt working people', but ministers are unable to say that remains the Government's policy.

"Labour have created a black hole in the public finances because of the Prime Minister's weakness and inability to cut spending. That means more tax rises are coming.

"Labour must recognise that we cannot keep increasing taxes - businesses are closing, there are no jobs, and the economy is shrinking. Only the Conservatives believe in sound money and low tax."

A Labour Party spokesman said: "In just 11 months, Keir Starmer personally signed three big trade deals with the USA, India and EU - which are creating jobs and bringing down bills. Yet bungling Kemi Badenoch failed to deliver these in her years as Trade Secretary.

"Instead of carping on about others, when will Badenoch apologise for her role in governments that crashed the economy, sent cost of living and mortgages rocketing, and left a £22 billion black hole?

"This Labour Government is cleaning up the Tory mess. Our Plan for Change has boosted pay for three million of the lowest earners, protected the pensions triple lock, delivered free school meals and frozen fuel duty - meaning more money in the pockets of working people."

The Treasury has been contacted for comment.