Labour’s ‘disastrous’ tax plans will ‘bankrupt’ Britain, warns former Chancellor

Labour has signalled that October's Budget will be “painful”, due to the discovery of a “£22billion black hole” left by the last Conservative Government.

Keir Starmer’s party has so far said it will not raise income tax, national insurance or VAT, but a raid on capital gains tax (CGT) was not ruled out in the Labour manifesto.

An increase in CGT rates could deter businesses from investing in the UK, hinder growth and lead to a lower tax yield for the exchequer.

Speaking to GB News, Kwarteng warned that Labour's tax plans are “disastrous” and will “bankrupt” Britain.

“High tax will lead to much lower growth, which will lead to more tax,” he said.

“Labour can’t control public spending and will try to tax their way out of the hole they are making.”

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It is widely reported that the potential tax increases on the horizon will increase the chances of rich business leaders leaving the UK and discourage investment in the economy.

Independent Economist Julian Jessop described Labour’s plans on tax as “Chilling” and said any increases in CGT or inheritance tax (IHT) would send a “chilling signal to anyone looking to save or invest”.

However, critics do not expect the Government to stop there, as it is expected that the Chancellor will seek to raise money by cutting Winter Fuel Payments for pensioners, removing the VAT exemption for private schools, with pension savers even being potentially targeted.

Reacting to Labour’s potential tax hikes, former Conservative MP, Sir John Redwood told GB News: “This is an anti-growth Chancellor taxing the rich out of the country and bashing business.”

Redwood fumed: “Reeves is an austere Chancellor, a Chancellor who thinks you can tax your way to prosperity, a Chancellor who will drive many rich and successful people and companies out of Britain.”

In response, the Treasury said: “Following the spending audit, the Chancellor has been clear that difficult decisions lie ahead on spending, welfare and tax to fix the foundations of our economy and address the £22billion hole the Government has inherited.

“Decisions on how to do that will be taken at the Budget in the round.”