Labor has pledged not to increase income tax and national insurance contributions if it wins the general election, although cuts are still on the table.
Shadow Chancellor Rachel Reeves, speaking to the BBC's Laura Kuenssberg, expressed her reluctance to make cuts but acknowledged the significant economic challenges ahead, which would require “tough decisions”.
The Conservatives, who have twice cut National Insurance, are aiming to abolish it completely if possible. Minister of Economy at the Ministry of Finance, Bim Afolami, criticized Reeves' position, saying it was a reflection of “the same old Labor Party” that had no concrete plan to cut taxes and “hardworking families are footing the bill.” had to have their unfunded expenditure obligations paid.”
Afolami argued that the choice at the election was between Rishi Sunak's “clear and bold plan to cut taxes and end double taxation on work” and Labour's approach, which he said would result in higher taxes once the funds run out.
Reeves responded by emphasizing Labour's commitment to cutting taxes without presenting “unfunded proposals”. She reiterated that neither she nor Labor leader Keir Starmer would increase income tax or national insurance. She pointed to Labour's opposition to the NI increases introduced by Rishi Sunak as Chancellor.
“Unlike the Conservatives, who have already proposed £64 billion in unfunded tax cuts in just three days of this campaign, I will never play fast and loose with the public finances,” Reeves claimed. “I will never submit unfunded proposals.”
Labor estimates that the government's ambition to abolish national insurance contributions for workers would cost £46 billion. The Conservatives have responded that this change will not happen until 2030, depending on sufficient economic growth.
The Tories claim that Labour's spending commitments would create a deficit of £38.5 billion, equivalent to a “tax increase of £2,094 for every hardworking family”, a figure that Labor rejects.
The Institute of Fiscal Studies (IFS) warned of the budget challenges awaiting the next government, predicting that tax increases or cuts to public services could be inevitable regardless of the election outcome.
Reeves assured there would be no return to austerity, highlighting Labour's fully funded and funded commitments to strengthen frontline services including the NHS, police and education. The funding would come from ending sales tax exemptions for private schools, expanding the windfall tax for energy companies, tackling tax avoidance and ending non-dominant exemptions.
However, Reeves indicated that a broader economic strategy is essential. “Ultimately, we need to grow the economy and reverse this poor economic performance,” she said.
During a campaign visit to Ossett, West Yorkshire, Reeves stated that there were no plans for further tax increases, including VAT and capital gains tax.
While promising more money for NHS appointments and teacher recruitment, Reeves suggested that unprotected areas such as council services and the justice system could face cuts if Labor sticks to its rule against borrowing for day-to-day spending.
Reeves declined to set a timetable for increasing defense spending to 2.5% of national income, preferring a review of current costs, which she said had “spiraled out of control under this administration.” . Rishi Sunak has committed to achieving this defense spending target by 2030.
If Labor wins the election, Labor plans a spending review, introducing a 'fiscal lock', which will require a full forecast from the independent Office for Budget Responsibility (OBR) for any major changes to taxes and spending. The OBR typically takes ten weeks to make such a forecast, potentially delaying immediate spending action after the election.
Liberal Democrat leader Sir Ed Davey criticized both major parties, saying his party would not raise taxes on ordinary people and accusing the Conservatives of raising taxes to record levels. He claimed the Lib Dems could 'beat the Tories where Labor cannot'.
The SNP accused Labor of misleading voters over its spending plans, with economy spokesman Drew Hendry claiming Labor had a “devastating plan to cut funding for public services by billions of pounds” and suggesting a “conspiracy of silence” between Labor and the Tories about cuts. cuts.
