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  1. Politics
  2. UK Politics
7 March 2024updated 08 Mar 2024 11:46am

What would Labour do differently?

The party is standing by its commitment to reconfigure the way the public finances are measured.

By Freddie Hayward

The Conservatives’ snatching of Labour’s plan to cut the non-dom tax status shows that Keir Starmer now conducts British politics. The drumbeat of power is heard outside the Leader’s Office. This is a government in opposition.

The telling sign was how Jeremy Hunt’s primary objective was causing trouble for Labour. The Tories threw the opposition a problem: how will you find the money that underwrote your retail offer (more MRI scanners and nurses) now that we have spent it on a National Insurance tax cut? I asked Labour’s spokesperson that question. The reply was simple: we stand by the commitments and we will find the money without raising taxes. In other words, the £1.2trn of state expenditure will be rejigged, shook, ironed out and refined until a few billion pounds are found.

That is perfectly reasonable. But it exposes a myth in politics right now: that the day-to-day announcements on tax-and-spend will fundamentally reshape the country. In other words, money for a few more MRI scanners is available whether or not it is raised through non-doms. It matters much more whether the Houthis shut down trade through the Suez Canal in the context of buying more MRI scanners than whether the government pockets a couple billion in tax.

Flick through the Office for Budget Responsibility’s report, published alongside the Budget, and you will read sentence after sentence decrying the uncertainty in the British economy. Introducing a vape tax to pay for cuts while failing to confront the implausible post-election spending reductions is a testament to the unseriousness with which the government is setting out its vision. It is political theatre, a dance for the cameras. As David Gauke, a former Treasury minister, writes in his column for us, “the spending plans confirmed by Hunt [yesterday] are a work of fiction”.

This is politically relevant because it means the Tories have little chance of turning the iceberg-hit economic ship around, and the public knows that. Look at who they trust more with the economy. Look at the fact that living standards will be worse on polling day than when Boris Johnson was elected. A £40-a-month tax cut will not compensate for overall tax rises. An alcohol duty freeze still means a pint costs more than £7 in London; £5m for village hall rejuvenation (yes, this was announced) is not a levelling-up agenda.

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Will Labour do any better? The bar is low. The Tories are struggling so badly to tell a story or produce policies to win over voters that I don’t think Labour needs to offer a radical departure from the status quo. But that is a different matter to how it will govern.

Another thing the Labour spokesperson told me was that Labour stood by its commitment to reconfigure the way public finances are measured. Even if the newspapers confidently report that Labour will stick to a five-year debt reduction fiscal rule, I still think there is a good chance that time-frame will be extended to ten years. This makes sense: Starmer’s central message is that the country is in such crisis that a Labour government requires ten years – “a decade of national renewal” – to shift its direction. Few people know what the fiscal rules actually are. But wouldn’t the Conservatives paint Labour as the party of debt? Fine, make the time-frame shift a few months after the election.

In any case, I do not think Labour will lose much sleep over yesterday’s Budget. Hunt was trying to draw a divide with Labour over taxes. As I wrote yesterday, I think he went a long way to doing so. This will clearly be a central issue at the next election. But will it work? I doubt it.

This piece first appeared in the Morning Call newsletter; receive it every morning by subscribing on Substack here.

[See also: The Budget showed Labour is setting the political rhythm]


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