Labour have matched the Conservative party by promising not to increase National Insurance, Income Tax, VAT, Capital Gains tax, VAT, or Corporation Tax. Together these account for a shave under three-quarters of all government revenue and as a result I expect this pledge will be broken, either literally or via some fiddled that are a rises in all but name.
Tricks like fiscal drag are to be expected so by ‘fiddle’ what I have in mind is changes to the scope of taxes, such as removal of exemptions/reliefs and reclassifications of which tax things fall under. Reducing the number of things that attract lower rates of VAT and moving some things from Capital Gains to Income Tax seem the most likely targets.
With national debt interest payments already at 10% of government spending there is not much scope for extra borrowing, and history has shown that savings from things like fraud crackdowns never materialise. With the economy being stagnant since 2008 extra revenue from growth in GDP is complete wishful thinking. Significant portions of new money will only come from upping tax rates.
As for spending there are some big ticket items in the pipe-line. Like it or not the government will have to pick up the tab for the railways and Thames Water because they are bankrupt, the Horizon and Hepatitis C compensation payouts will both be multi-billion, councils going into Section 114, a huge maintenance back-log, and the gorilla of the health budget is exploding.
This is not specifically about Labour. The Conservative manifesto talks about reduced spending but the only way to cut that steeply is to abolish entire departments overnight Javier Milei style, which clearly they will not do.