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Sir Keir Starmer set out £8.6bn of tax rises in the Labour manifesto on Thursday as he promised to “stop the endless Conservative chaos” and begin a decade of “national renewal”.
The figure, which includes a clampdown on tax avoidance, came as the Labour leader put economic growth at the heart of his pitch to British voters ahead of the UK general election on July 4.
It includes £5.2bn a year raised from investing in tackling tax avoidance and closing non-dom tax “loopholes”, £1.5bn from taxing private school fees and £565mn from raising taxes on profits earned by private equity executives.
Labour also said it would raise £1.2bn from its windfall tax on oil and gas companies, along with £3.5bn a year of extra borrowing, to fund the party’s slimmed down green prosperity plan.
Starmer said his plan to “get Britain building again”, which includes planning and energy reforms, would stimulate UK economic growth. Economists are sceptical that growth alone can solve the UK’s immediate fiscal problems.
“The world has become increasingly volatile, with a major war in Europe for the first time in a generation and even greater threats to the living standards of working people,” Starmer said.
“This ‘age of insecurity’ requires the government to step up, not to stand aside,” he added.
The 134-page manifesto document consisted almost entirely of policies and funding measures that the party has previously set out, with increased spending totalling £9.5bn a year. This included 6,500 new state schoolteachers, boosting the number of NHS appointments to tackle backlogs in the health system, and the green prosperity plan, Labour said.
Starmer said some people might complain that there were no “rabbits” in the Labour manifesto but would make no apologies for his pragmatic and consistent approach. “I’m the candidate to be prime minister, not the candidate to run the circus,” he said.
The Labour leader emphasised his “tough new spending rules” and highlighted the party’s promise not to lift corporation tax, VAT, income tax or national insurance.
Elsewhere — for example on capital gains tax and pension tax relief — the party only says it has “no plans” to raise taxes rather than ruling them out entirely.
Starmer wants to display how he has rebuilt Labour as centrist and pro-business, far from the radical leftwing party he inherited from former leader Jeremy Corbyn.
As a young woman started to heckle the speech for its lack of radicalism — and was then removed by security — an unruffled Starmer replied: “We gave up being the party of protest five years ago.”
Conservative leader Rishi Sunak announced a package of new tax cuts and spending increases at his own manifesto launch on Tuesday, promising to fund these through a welfare squeeze and a crackdown on tax avoidance.
There were no specific promises from Labour to cut taxes in the manifesto following the Tories’ pledge of reductions to national insurance.
Asked about the contrast between his tax-rising manifesto and the Tory tax-cutting manifesto, Starmer replied: “If there is one lesson from Liz Truss it’s that if you make unfunded tax cuts then it damages the economy and working people pay the price.”
Current government spending plans envisage a 1 per cent annual real terms rise in overall departmental expenditure in the coming years.
Given pledges to boost spending by more than that in areas such as healthcare, and to have debt as a share of GDP falling year on year in five years’ time, the plans imply cuts to unprotected departments, with the Resolution Foundation think-tank estimating £21bn of cuts over five years.
Labour election co-ordinator Pat McFadden earlier on Thursday suggested such cuts could be avoided if there is a surge of economic growth. “The thing about these estimates is they assume a static situation in time as regards growth,” he told the Radio 4 Today programme.