Can anyone say what a Keir Starmer Labour government will actually do? - Brian Monteith

It was an astute example of expectation management. If Labour wins – and the questions currently look like when and by how much rather than the actual outcome – the electorate will no doubt be hungry for change. It will be after 14 years of the Conservative and Liberal Democrat coalition plus five solo Tory prime ministers have finally been repudiated by the electorate.

If anticipated changes do not happen quickly the danger for Labour is it will very easily become unpopular.

Keir Starmer and his shadow cabinet have turned saying very little about what they will actually do when in power into their very own performance art. Past policies on all sorts of issues that passed Starmer’s lips when running for leader have been quietly dropped and shadow ministers who have made off-the-cuff commitments that would lead to unbudgeted spending have been made to admit very quickly to having “mis-spoken”.

Huge public spending challenge

Why would the opposition – consistently more than 20 points ahead in the polls since 2022 – make the mistake of tripping itself up when the Government is doing a fine job of eating itself in plain sight?

A Labour government would face a huge public spending challenge. So much of what it has signalled it would do to solve problems – such as employing more staff in the NHS and forcing overtime and weekend working to reduce waiting lists and waiting times (in England at least) will require spending increases. As the Conservatives have already introduced some of Labour’s proposed changes in taxation, such as continuing with the oil and gas profits levy and ending non-domicile tax arrangements, the intended revenues will already have been spent.

To find out what Labour’s answer is to its funding gap might require the equivalent of a degree in Kremlinology.

We can uncover what Labour-supporting think tanks such as the Resolution Foundation have been saying since Starmer became leader and record which ideas have found favour or, when Labour has been pressed to dismiss, have produced a non-denial denial. We can look at the record of some of the key advisors appointed to key roles and discover what they have advocated in the past (and shudder in horror at the thought of lowering the VAT threshold).

Both of these approaches have revealed a number of policies that are undoubtedly on the table that Labour does not want to discuss. The most obvious is how the introduction of 20 per cent VAT on independent school fees (a policy that would apply UK-wide) could also be extended to private knee, hip and cataract operations, laser eye treatments and private dental procedures.

Sole traders and pensioners watch out!

What is arguably good for private education must surely for consistency be good for private health – if sold as raising funds to “save our NHS”?

Likewise, if Labour promises to not raise personal taxes that does not mean taxes for many will not go up – for another way to raise revenues is to extend the scope of existing taxes – such as broadening National Insurance Contributions by ending the lower rates for the self-employed and including incomes from pensions, investments and property rentals that currently are not liable. Sole traders and pensioners watch out!

Another means to establish Labour’s real intentions is to translate the intentionally obscure jargon and vague euphemisms that have been adopted by the Shadow Chancellor, Rachel Reeves to obscure from view what she really wants to do. Fortunately a painstaking 56-page report “Stripping away the jargon” is about to be published this week by Bob Lyddon, the banking and financial expert who also uncovered how international corporations are able to use tax write-offs through aircraft leasing to reduce their corporation tax liabilities in Ireland from 12.5 per cent to as little as 4 per cent.

Lyddon gained a First in modern languages at Cambridge and is ideally placed to interpret the suffocating “Reevespeak” that could be heard when the Shadow Chancellor gave her Mais Lecture on 19 March. What he suggests is that Reeves intends to roll back the years to the halcyon days of New Labour with, “higher taxes, higher borrowing, borrowing concealed in a new version of Private Finance Initiative, more intervention, more quangos, and restored power for trade unions – the only new thing is the major spend on net zero.”

Targeting pension funds also appears to be on Reeves’ agenda, changing regulations so they are “encouraged” to invest in net zero projects and thus avoiding the need for public funds to do so. It will be another damaging distortion to the market that will never be picked up by the public – like Gordon Brown’s raid on pension fund tax reliefs in 1997 – until it is too late.

Lyddon’s analysis further suggests Reeves will go big on off-the book debt, in particular for net zero infrastructure, by aping the institutional approach of the Brussels model, called InvestEU. This is a convenient accounting trick that allows major investments in public infrastructure (such as net zero) and to borrow more but outside the budget for day-to-day costs. Amazingly, economic growth appears to occur and the country’s debt-to-GDP ratio appears to fall – but it’s all smoke and mirrors.

All borrowing is taxation delayed and it simply means Labour would put its infrastructure spending on a credit card but our children and grandchildren will be the ones who have to pay it off. Young voters should beware.

In the run-up to the general election we are going to need more Bob Lyddon’s running their expert eyes over what Labour is saying.

Not being the Conservatives is not a good enough reason to vote Labour if the intentions of Starmer and Reeves are to get elected without constraints so they have carte blanche to do as they please. The time for scrutiny is now.

Brian Monteith is a senior advisor to the Tax Reform Council.