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Something in this election isn’t adding up

19 June 2024
| by Field Team

This General Election has been unusual in that we’re seeing Labour attempt to occupy the ground the Conservatives once firmly owned: financial prudence.

As the campaign grinds on and with the main parties’ manifestos published, one key question remains - if everyone is promising not to raise taxes but fix ailing public services, where will all the money come from?

Labour’s to-do list if they do end up in Government will be unenviable. The NHS is struggling, the economy isn’t growing, and the boats haven’t been stopped just to name a few. Whoever wins will need to resolve the junior doctors strikes – even if they won’t get the full 35% increase demanded, neither side have set out how to pay for anything. Teachers are warning they need a pay deal as well. There’s rising demand for mental health services and if the past five years taught us anything, the unexpected can come with big bills.

The fixes to these will all require money that doesn’t exist.

Labour says the answer is economic growth. Conservatives say their plan – which is designed to produce economic growth - is already working so we should stick with it.

But with the economy flatlining, growth won’t be immediately forthcoming. So will we see the return of the magic money tree, or is it already with us? Or will taxes have to go up? With Labour holding such a commanding lead over the polls, it is their plans coming under the most scrutiny.

Rachel Reeves has been hitting the airwaves to defend the plan but it is Keir Starmer’s recent comments causing the most stir: “Taxes won’t go up for working people”. Sounds quite a legitimate statement on the surface but now the media and the public want to ask: who is a working person? And at what point will someone’s taxes go up?

The debate is now very much alive. Starmer and Reeves will be visiting a supermarket today to talk to more of these “working people” about their plans but they will quickly find themselves having to be on the defensive if the front pages are anything to go by this morning. Labour have got this far by insisting their entire manifesto is fully funded by changes including VAT on private schools, a hit on non-doms and a levy on oil and gas companies. But they’ve also been forced to concede the manifesto is (obviously) not the sum of their plans for a five year term. The document is silent on a raft of taxes – some, like Capital Gains Tax and Stamp Duty, can only be changed effectively on the day of the Budget to stop people protecting money. Others, like fuel, alcohol and tobacco duty, are conveniently always decided Budget by Budget. Still others – like Council Tax or Inheritance Tax – are in need of reform but big changes always produce winners and, more importantly, losers. That’s hard to confront in an election.

Tax is becoming the central plank of the final stage of this campaign. Arguably it has always been a key line in the election since the first Leaders Debate when Sunak was able to catch Starmer off guard with attacks over Labour’s tax plans but this line of questioning seems different. Can Labour make changes to the wider tax system without voters feeling betrayed? It will be the key question of the first couple of years of a new Government.

(Photo provided by the BBC)

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