Starmer Under Fire Over Potential Tax Hike on Pensioners and Workers

Sir Keir Starmer has drawn criticism for refusing to confirm whether the freeze on income tax and National Insurance thresholds will end as planned in 2028. His lack of clarity has sparked concern that millions of working households and pensioners could be pulled into higher tax bands, despite no formal rise in tax rates, a tactic often referred to as a “stealth tax”.

The current freeze, introduced by the previous Conservative government, was originally intended to run until 2028. However, during Prime Minister’s Questions, Starmer avoided giving a direct answer when asked whether the thresholds would be lifted on schedule. While he reaffirmed Labour’s manifesto pledge not to raise income tax, National Insurance (a form of employee and employer contribution to the welfare system), or Value Added Tax (VAT), he made no such commitment regarding the thresholds at which people begin paying those taxes.

Economic analysts warn that maintaining the freeze would result in significant “fiscal drag”, with people paying more tax purely due to inflation-driven wage increases. The Institute for Fiscal Studies (IFS), a respected economic think tank, estimates that over four million more people will be drawn into the tax system, and many will move into higher bands without any real increase in spending power.

The Office for Budget Responsibility (OBR), the UK’s independent fiscal watchdog, projects that extending the freeze could generate nearly £50 billion by 2030. While this may help balance public finances, critics argue it disproportionately impacts pensioners, many of whom may be taxed on their state pension for the first time due to the rising tax burden.

Conservative MP Kemi Badenoch accused Starmer of flirting with a “retirement tax”, warning that Labour’s economic policy risks burdening those least able to afford it. She called for immediate clarity to reassure pensioners that their incomes won’t be quietly eroded by inflation-linked taxation.

As the government faces mounting fiscal pressures ahead of the autumn budget, Starmer’s reluctance to rule out continued freezes has only fuelled speculation. If Labour intends to govern transparently, many believe it must stop dodging key questions and be honest with working families and pensioners about the true cost of its policies.

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