Not Even Keir Starmer’s Cabinet Can Decide On The Definition For ‘Working People’

Rachel Reeves’ highly-anticipated Budget is just days away now, but it seems Labour’s top team are still divided over one of its core aspects – the definition of a “working person”.

Why is this an important phrase for Labour?

This seemingly innocent term has started to weigh down the government over the last few weeks because Labour pledged in their election manifesto not to increase taxes on “working people”.

According to the party, that included VAT, income tax and National Insurance contributions (NICs).

But, after being elected, ministers made a point of telling the public, repeatedly, about the terrible state the Tories left the country’s finances in – and how they were looking to raise £40bn in the Budget.

As more and more questions were asked over just where – or who – those funds would come from, it looked like employers’ contributions to National Insurance would probably have to go up.

It sparked outrage, and questions about whether or not that counted as a breach of manifesto, and further queries about exactly who would be protected under Labour’s promise to look after “working people”.

How have different ministers defined it?

Chancellor of the Duchy of Lancaster, Pat McFadden, said on Monday that the term means “somebody to whom the promises we made in our manifesto apply.”

He told Sky News he was not talking about particularly incomes or jobs, but people who pay tax mainly in income tax, VAT or NICs.

But, on Sunday, education secretary Bridget Phillipson suggested she was a working person on the £160,000 salary she is entitled to.

“My income derives from my job, and I’ll pay whatever taxes are required of me,” she told the BBC.

She also claimed: “Our manifesto was very clear about who we were talking about and who we meant.”

It comes exactly a week after health secretary Wes Streeting told Sky that the definition of “working people” does not include people like himself or presenter Trevor Phillips. 

Meanwhile, chancellor Rachel Reeves told LBC on Friday that Starmer is a working person, despite earning a six-figure salary.

She said: “The prime minister gets his income from going out to work and working for our country.

“We made a clear commitment in our manifesto not to increase the key taxes that working people pay – National Insurance, income tax and VAT.

“Despite difficult circumstances, and the unfunded commitments of the previous government, I’m determined to stick to that manifesto commitment in the Budget next Wednesday.”

She added: “People who go out and make their money through work are, by definition, working people and the key taxes that working people pay… they will not be rising.”

The PM himself said on Friday that workers who get additional income from assets – like shares or property – “wouldn’t come within my definition” of working people.

He urged against making “assumptions” about what that means for tax policies, but said a working person means someone who “goes out and earns their living, usually paid in a sort of monthly cheque” who can’t “write a cheque to get out of difficulties”.

His spokesperson later said that those with a small amount of savings could still be defined as working people.

Treasury minister James Murray also refused five times to tell the BBC on Friday if “working people” meant landlords.

He ended up saying: “Working people are people who go out to work for their income.”

What does this actually mean for taxes?

It will not be clear who exactly will face tax rises until Reeves’ Budget on Wednesday.

However, McFadden maintained on Monday that Labour had not made a mistake in using this term, and said it refers to Labour’s promises in the run-up to the election which they intended to keep.

Reeves similarly defended the cabinet on Friday, saying: “Everyone knows there’s going to be difficult decisions in the Budget next week.

“The key taxes that working people pay will not be going up in the Budget.

“That is a choice that I’ve made, it’s a commitment we made to the British people in our manifesto.”