The Prime Minister’s savers’ ‘own purpose’ threatens British investment

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

The Prime Minister faced a backlash from the City after saying that savers and investors who receive income from the stock market would “not fall within my definition” of an employee.

The comments fueled fears about what Rachel Reeves will announce in next week’s budget, given Labour’s 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 £35 billion.

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

The Prime Minister’s comments were viewed as particularly bad after he held an investment summit last week to drum up support.

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

Alasdair Haynes, founder and CEO of challenger exchange Aquis, branded the comments as “dangerous.”

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

‘We need more people to own shares in this country, not fewer, or Labor is not going to fund their growth strategy.

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

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

No. 10 hastened to clarify that those with small savings were considered working people. But having ruled out increases in income tax, national insurance and VAT, Reeves is struggling to add up her budget figures.

The Chancellor appears to want to 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 a CGT increase will discourage entrepreneurs from setting up a business. Richard Bernstein, managing director of investor Crystal Amber, said: “Company founders often work more than 60 hours a week and have the stress and responsibilities that come with hiring people.” Experts warned that it was wrong to suggest that share ownership was reserved for entrepreneurs or the wealthy.

Andy Butcher, financial planner at asset manager Raymond James, said: ‘In Britain, investing is seen as the domain of the rich. This is a damaging image.’

Tom Selby of estate agent AJ Bell noted that ‘the government’s commitment not to increase taxes on working people was always going to fail’ and said that increasing CGT ‘will undoubtedly impact many working people and reduce the rewards for investment will decline – potentially undermining the government’s wider ambition. to stimulate economic growth’.

And Susannah Streeter of Hargreaves Lansdown said: ‘If ordinary people were to invest more in share markets, not only will they have a greater chance of building their financial resilience, but their money will also be channeled into UK assets, helping businesses access finance to grow. .’

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