In a sea of towering fiscal commitments and promises from political manifestos this year, the Labour Party’s manifesto stands out like a small semi-detached house among a cityscape of skyscrapers. With the release of their official fiscal plans, the party’s stance on taxation and spending has come into clear view.
The manifesto, which has been met with mixed reactions, outlines Labour’s intentions for both day-to-day spending and green investment. However, upon closer examination, it becomes apparent that the proposal offers no new policies and instead relies on measures previously announced.
In terms of taxation, Labour plans to generate an additional £7.4 billion by 2028/29, primarily through measures such as tackling avoidance, clamping down on non-doms, and implementing VAT charges for private schools. Of this amount, only £4.8 billion is earmarked for spending, which some critics argue is not enough to sustain public services in the face of projected real-term cuts in the coming years.
Despite this, the manifesto boasts a £2.5 billion safety buffer in the public finances, hinting at a cautious approach from the party. However, the true extent of Labour’s fiscal plans becomes clearer when taking into account their Green Prosperity Plan, which includes a £4.7 billion annual investment in green initiatives funded by a tax on oil and gas companies in the North Sea.
Overall, Labour’s manifesto proposes increased borrowing for investment purposes, rather than day-to-day spending, and claims that these plans are compatible with their fiscal rules. However, there are concerns that in reality, the party may need to spend more on public services than they anticipate.
In comparison to other parties, Labour’s proposed spending is significantly smaller. The Conservative party has outlined plans for an estimated £16 billion per year by 2028/29, while the Liberal Democrats’ proposal reaches up to £47 billion when including investment. In contrast, Labour’s plans amount to only £10 billion per year.
This makes the Labour manifesto even more fiscally conservative than that of the Conservative party, and a far cry from the ambitious plans put forth by former Labour leader Jeremy Corbyn in previous elections. It suggests that under a Labour government, the size of the state and taxation levels would remain relatively unchanged.
Of course, the question remains: will these plans come to fruition? While the party’s leader Keir Starmer remains hopeful that economic growth will provide the necessary tax revenue to fund their manifesto, there are concerns that this may not be the case. As the election approaches, the feasibility of Labour’s fiscal plans will undoubtedly come under further scrutiny.