Starmer accused of ‘letting off’ City lawyers while stripping cash from pensioners in Budget

Calls for reform of tax paid by law, accountancy and private equity firms instead of controversial cuts to winter fuel payments

Keir Starmer has faced accusations his government has ‘let off’ City lawyers and private equity firms while stripping cash from pensioners in the Budget.

Labour peer Lord Sikka even suggested enough money could be raised to cancel the party’s highly controversial winter fuel payment cut and scrap the much-criticised two-child benefit cap.

The row centres on the Rachel Reeves’ decision to hike employers’ national insurance contributions last month.

The move has led to howls of protest from businesses, charities and even GPs, who stand to be impacted.

But members of limited liability partnerships (LLPs) escaped the tax raid.

LLPs escaped Rachel Reeves’ tax hikes (Dominic Lipinski/PA) (PA Archive)

Many law, accountancy, architect and private equity firms structure themselves as LLPs, and their members are treated as self-employed for national insurance purposes, meaning they pay the lower Class 4 rate – despite often earning large salaries.

It was thought the government was going to look at closing this loophole in October’s Budget, although such measures were not announced by the chancellor.

Lord Sikka, a former accountancy professor, said that the government had “let off accountancy, architects (and) private equity firms.”

He also suggested that the Treasury could have taken in £4bn from just four of the largest law firms, “enough to cancel (the) two-child benefit cap (and the ) winter fuel payment cut”.

Lord Sikka told The Independent there seemed to be “no political will” to change the situation.

Tax expert Dan Neidle called two years ago for the system to be changed and warned: "The UK taxes high-earning lawyers less than bankers. That’s irrational – and illustrates a wider problem with the tax system. It’s hard to change, but we’d all benefit if we taxed all income in the same way."

Ministers have defended plans to strip millions of pensioners of their winter fuel payments (Peter Byrne/PA) (PA Wire)

Millions of pensioners are to be stripped of help to pay their winter fuel bills after Labour blamed the last Conservative government for leaving a £22bn black hole in the public finances.

Ministers have pledged to protect less well-off pensioners and urged them to apply for pension credit, under which they would still be eligible for the £200-300 payout this winter.

But they have faced accusations they risk forcing older people to choose between heating and eating.

Ministers said last month that they planned to write to 120,000 of the most vulnerable pensioners who they feared would miss out on the payments after the changes – but many face delays in having their applications for pension credits processed.

Labour faced its first  backbench revolt over the two child cap, which affects 1.6 million children, earlier this year.

Charities, opposition parties and some Labour MPs all urged Sir Keir to abolish the cap, brought in as an austerity measure under the Conservative coalition government.

Introduced by the then-chancellor George Osborne in 2015, the policy limits child welfare payments to the first two children in most families.

The charity Action for Children has called the measure “cruel” and said it “creates and entrenches child poverty”.

The Treasury has been approached for comment.