Somewhere beneath the smoldering ruins of CCHQ lies the “Labour’s Tax Bombshell” campaign that it was long suggested it could run. Keir Starmer may be a very dour Tony Blair. But Rishi Sunak has proven even more hopeless in aping John Major. He should swap the Maccies for a soap box.
Nonetheless, it has become obvious that Labour’s tax and spending plans are as fictitious as long suspected. Paul Johnson is doing God’s work. As in his ascent to the Labour leadership, Starmer is telling his electorate what is required to win, and planning on doing something different in power.
Two recent examples stand out. Nick Thomas-Symonds suggested that Labour’s plans were dependent on a spending review, something impossible until they had seen “the books” in office. Meanwhile, The Guardian reports the party is considering hikes to both inheritance and capital gains tax.
Having ruled out increases to income tax, national insurance, or VAT, both those potential pips to squeeze have a helpful soak-the-rich flavour that makes it easier to dodge accusations that it is hiking taxes on working people (however defined). Rachel Reeves can plead innocence, whilst gobbling up £10 billion.
As Nick Timothy has tirelessly pointed out, this is as unsurprising as an Ed Davey photo op. Labour has made lots of costly and ambitious pledges – improving NHS waiting lists, decarbonising the grid by 2030, hiring new teachers and police officers – whilst zealously pledging fealty to fiscal orthodoxy.
The OBR requires its pound of flesh. Reeves aims to empower the body soon after entering Number 11, if only to slip in a few references to Liz Truss. Labour has spent the proceeds of its hike on private schools several times over. Its backbenchers will not like austerity 2.0. These circles must be squared.
Colour yourself shocked when our first female Chancellor announces a suite of unexpected-but-not-unbriefed hikes at her first Budget. Reeves will plead ignorance and Tory duplicity. Her critics will point out she is talking nonsense, since all the information she needs is available now. She won’t care.
One person who will is Sunak. If he takes our advice and stays on as Leader of the Opposition, the Prime Minister will have the task of responding to Labour’s first Budget. If Reeves raises taxes, he can claim some belated vindication for his much-debated claim of £2000 in hikes from Labour.
The sums may have been drawn up on the bag of a Treasury fag packet. But Sunak hasn’t been wrong to say that Labour’s numbers don’t add up, that Labour governments always end up hiking taxes, and that voters can’t trust Starmer’s pledges. Well done! He won the argument.
Just as absurd as that claim was coming from Jeremy Corbyn, so will it be from an ex-Prime Minister staring at a Labour government with a 200+ majority. The real worry for Sunak should be why it hasn’t cut through now. A hopeless campaign, a shredded reputation, gargantuan apathy: pick your poison.
But the reason that will butter the most parsnips on the Tory right is that Reeves will only be acting in Sunak’s image. He froze income tax thresholds and took the tax burden to a 70-year high. He is not so much the boy who cried wolf, but the wolf itself. Physician, heal thyself.
Then again, as Paul Johnson points out, the Tories have achieved the remarkable feat of hiking taxes on higher earners and pensioners, whilst cutting them for average earners and those of a working age, and giving the opposite impression. The national insurance cuts were ignored. They did not fit the narrative.
Sunak would also argue that he was squeezed by a confluence of factors international – Covid and Ukraine – and domestic – Boris Johnson’s disinterest in economics, and Tory MPs’ unwillingness to cut spending – that made tax hikes inevitable. Don’t forget the Gods of the Copybook Headings.
With Reform peddling sums that would make Liz Truss blush, it’s a bleak election for any voter keen on reducing the tax burden who is also cursed by a passing relationship with fiscal sanity. But with a very low bar, the Tory offer on tax is the closest to approaching honesty. Sunak will be vindicated, one day.