Labour defence

Starmer rejects IFS claim of ‘conspiracy of slience’

Paul Johnson IFS
Paul Johnson: ‘a dizzying number of reviews and strategies’ (pic: Terry Murden / DB Media Services)

Sir Keir Starmer is putting his faith in growing the economy to avoid tax rises and spending cuts as economists once again accuse him and Tory leader Rishi Sunak of a “conspiracy of silence” over the state of the public finances.

The Labour leader insists that his reforms will help unleash billions of pounds of investment in the economy and provide the stability and certainty that businesses and the markets crave.

He has said he will not raise the main rates of tax — income tax, national insurance and VAT — but questions remain over capital gains tax, fuel duty and tax relief on pensions.

Rachel Reeves, who would become Chancellor if Labour wins on 4 July, told Daily Business earlier this month:  “We don’t have any plans on taxation beyond those that I have already set out.”

Sir Keir has also insisted there would be no return to austerity, although this does not rule out cuts to departmental spending which will be part of the process of reducing regulation to help boost productivity.

Economists note that Labour will maintain the freeze on income tax thresholds until 2027-2028, which would drag millions of people into higher tax bands.

Sir Keir is focused on growing the economy and said he has “absolute confidence” in his plan. He has described criticism of the plan as “defeatism”” an hope for in this country is to flatline. That is the absolute opposite of the hope we inject through this ” and believes his manifesto will get lift the economy from its stagnant level of growth.

Sir Keir Starmer
Sir Keir Starmer is putting his faith in growth

Paul Johnson, the head of the Institute for Fiscal Studies, said there are many uncertainties in Labour’s manifesto which offers several reviews and strategies in place of detail.

“This is a manifesto that promises a dizzying number of reviews and strategies to tackle some of the challenges facing the country.

“That is better than a shopping list of half-baked policy announcements, but delivering genuine change will almost certainly also require putting actual resources on the table. And Labour’s manifesto offers no indication that there is a plan for where the money would come from to finance this.

“On current forecasts, and especially with an extra £17.5 billion borrowing over five years to fund the green prosperity plan, this leaves literally no room – within the fiscal rule that Labour has signed up to – for any more spending than planned by the current government. And those plans do involve cuts both to investment spending and to spending on unprotected public services….

“…Like the Conservatives and the Liberal Democrats, Labour continues in a conspiracy of silence on the difficulties they would face. These challenges are already perfectly clear. The books are open. A post-election routine of shock-and-horror at the state of the public finances will not cut it.”

Gemma Tetlow, chief economist at the Institute for Government added: “Like the Conservatives, Labour has done little to row back on the spending cuts already pencilled in for the next parliament.”

The SNP’s Economy spokesperson and Candidate for Inverness, Skye, and West Ross-Shire said: “Throughout this campaign, the Labour party have been desperately trying to hide their plans for £18 billion of spending cuts – but the truth has caught up with them and they have been well and truly caught out.”

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