Both parties are in fantasy land – but Sunak’s tax attack on Labour is rich given what his government has cost voters

Published

1 year ago

June 5, 2024

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Before we get on to any of the numbers – from Rishi Sunak’s claim about Labour raising taxes by £2,000 to the more outlandish numbers going around today – here’s the most important thing you have to know right now.

The parties fighting this election have yet to publish their manifestos. They might come as soon as next week, but until those documents, with their shopping lists of confirmed policies, actually land, we are in a kind of policy no man’s land where each side is guessing (and sometimes plain making up stuff) about what the other side actually wants to implement if they win the election.

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And since all parties like to talk a lot about exciting new things they’d spend money on and not half as much about the taxes they’d raise to pay for all that stuff, it doesn’t take a mathematical whizz to realise that if you take them all quite literally then you can impute some pretty big “black holes” in their plans.

Those “black holes” matter because both Labour and Conservatives have signed up to fiscal rules preventing them from splurging without limit. So if there is a hole, the assumption is it would have to be filled by raising taxes.

However, in the absence of either manifestos or detailed costing plans, the best we can do about all this for the time being is to speculate.

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Does Sunak’s claim about Labour taxes stand up?

That brings us back to the claim Rishi Sunak made in last night’s debate, that Labour will raise everyone’s taxes by £2,000. This is a direct consequence of this information vacuum.

It comes from a “dossier” published by the Tories last month, back before the election was called, which purported to calculate all Labour’s proposed tax and spending plans.

The headline finding from that paper was that over the course of the next four years Labour had roughly £59bn of spending plans (at least as far as the Tories claimed) but only £20bn of revenue raising plans. That leaves a £39bn hole. Divide that £39bn by the number of households in the country (18.4m) and you get a figure of just over £2,000. Voila: £2,000 of unaccounted tax rises or spending cuts which, said Rishi Sunak last night, would inevitably be filled with extra taxes.

Now, there are all sorts of objections to the way the Conservatives have carried out this exercise. For one thing, they deployed a weapon Labour don’t have: because they’re the party of government they were able to ask Treasury civil servants to cost some of the Labour policies (or rather, the policies they think Labour will implement – remember, those manifestos haven’t yet been published!).

Today there has been a backlash – including from the Treasury’s permanent secretary himself – about the way the Tories have portrayed these sums.

What the Tories have already cost households

The £2,000 figure isn’t really a Treasury calculation or for that matter an “independent” one, as Mr Sunak called it last night. It’s a Conservative figure – but it was put together in part with figures commissioned from civil servants.

There were other objections: Labour say many of the policies in that Tory dossier won’t cost half as much as the Conservatives claim.

But actually, surprising as it might sound, what’s most striking about this “bombshell” is how small it really is. Less of a bombshell; more of a hand grenade.

While £2,000 sounds like a big number, it’s actually a cumulative total from four years. A far more representative figure to take from the dossier is £500 – the annual figure.

And while that’s not to be sniffed at (if you believe it – which you probably shouldn’t) it’s far, far smaller than the tax rises we’ve all experienced under this Conservative government since 2019. They amount, all told, to an average of around £3,000 a year per household or, if we grit our teeth and tot it up as the Tories did in their dossier, over £13,000 over the course of the parliament. Which rather dwarfs that £2,000 figure.

Labour attack dossier is even more outlandish

So anyway, you’re probably hoping now we’ve explained the £2,000 from last night that we could leave things there. But sorry, no.

Because, this being the murky pre-manifesto period, Labour have gone one further and produced their own dossier, purporting to show Conservative fiscal plans for the coming years. But while the initial Tory document was somewhat conservative (with a small c) about its numbers, the Labour version is far more outlandish.

It assumes, for instance, that the Conservatives are planning to abolish National Insurance and inheritance tax overnight if they are elected. These are mammoth tax changes which the Conservatives have never committed to (they have made some vague noises about intending to abolish NICs but not in the next parliament).

Anyway, the Labour document takes these and other policies and works out that that would imply a black hole of roughly £70bn a year or a whopping £270bn when you tot up the first four years of the parliament (they actually provide five years of numbers but for the sake of comparability I’m looking solely at the first four years, as the Tories’ dossier did).

Divide that by the number of households (as the Tory document did) and you end up with a grand total over those four years not of £2,000 but of a staggering £14,000 per household.

Parties trading blows in the realms of fiscal fantasy

At this stage, now we’ve completely departed from realistic policy, you’re probably wondering when this silly saga will be over. Sadly the answer is: not yet.

Because having seen the Labour response, the Conservatives produced a second dossier, essentially saying: “Well, if you’re going to make all sorts of outlandish assumptions about the stuff we’ve vaguely talked about then can we have a go too?”

This final dossier includes all sorts of policies no one seriously expects Labour to implement this parliament: cutting corporation tax to 12.5%, scrapping business rates altogether, introducing French-style union laws. Add this all up and you end up with a grand total of £211bn a year or – if you multiply that by four years across a parliament, £844bn. So the best part of a trillion pounds.

We are of course in the realms of fiscal fantasy at this stage, but if you take that cumulative total and divide that by the number of households in the country you end up with an utterly ridiculous figure of £46,000.

Whether either party thinks these dossiers will change anyone’s mind in this election remains to be seen.

Right now they mostly look like an attempt to send economics correspondents completely crazy.

Both major parties are committed to tax rises

But the overarching point is as follows: both the major parties are committed to tax rises in the coming years. We know as much because the official Office for Budget Responsibility plans will see the tax burden increase sizeably, in large part because the main tax-free allowances are being frozen, ensuring everyone ends up paying more tax, once you adjust for inflation and rising wages.

These tax rises – the long-term consequences of the pandemic and the energy price guarantee – are quite likely to dwarf any measures we hear about in the coming manifestos.

But until we get those manifestos, the rest is, yes, speculation.

UK

Starmer and Reeves ditch plans to raise income tax in budget

Published

7 hours ago

November 13, 2025

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Starmer and Reeves ditch plans to raise income tax in budget

Sir Keir Starmer and Rachel Reeves have scrapped plans to break their manifesto pledge and raise income tax rates in a massive U-turn less than two weeks from the budget.

The decision, first reported in the Financial Times, comes after a bruising few days which has brought about a change of heart in Downing Street.

I understand Downing Street has backed down amid fears about the backlash from disgruntled MPs and voters.

The Treasury and Number 10 declined to comment.

The decision is a massive about-turn. In a news conference last week, the chancellor appeared to pave the way for manifesto-breaking tax rises in the budget on 26 November.

She spoke of difficult choices and insisted she could neither increase borrowing nor cut spending in order to stabilise the economy, telling the public “everyone has to play their part”.

The decision to backtrack was communicated to the Office for Budget Responsibility on Wednesday in a submission of “major measures”, according to the Financial Times.

Tory shadow business secretary Andrew Griffith said: “We’ve had the longest ever run-up to a budget, damaging the economy with uncertainty, and yet – with just days to go – it is clear there is chaos in No 10 and No 11.”

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UK

Economy grew by 0.1% in third quarter, official figures show

Published

18 hours ago

November 13, 2025

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Economy grew by 0.1% in third quarter, official figures show

The UK’s economic slowdown gathered further momentum during the third quarter of the year with growth of just 0.1%, according to an early official estimate that makes horrific reading for the chancellor.

The Office for National Statistics (ONS) reported a surprise contraction for economic output during September of -0.1% – with some of the downwards pressure being applied by the cyber attack disruption to production at Jaguar Land Rover.

The figures for July-September followed on the back of a 0.3% growth performance over the previous three months and the 0.7% expansion achieved between January and March.

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The encouraging start to 2025 was soon followed by the worst of Donald Trump’s trade war salvoes and the implementation of budget measures that placed employers on the hook for £25bn of extra taxes.

Economists have blamed those factors since for pushing up inflation and harming investment and employment.

ONS director of economic statistics, Liz McKeown, said: “Growth slowed further in the third quarter of the year with both services and construction weaker than in the previous period. There was also a further contraction in production.

“Across the quarter as a whole, manufacturing drove the weakness in production. There was a particularly marked fall in car production in September, reflecting the impact of a cyber incident, as well as a decline in the often-erratic pharmaceutical industry.

“Services were the main contributor to growth in the latest quarter, with business rental and leasing, live events and retail performing well, partially offset by falls in R&D [research and development] and hair and beauty salons.”

When measured by per head of population- a preferred measure of living standards – zero growth was registered during the third quarter.

The weaker-than-expected figures will add fuel to expectations that the Bank of England can cut interest rates at its December meeting after November’s hold.

The vast majority of financial market participants now expect a reduction to 3.75% from 4% on 18 December.

Data earlier this week showed the UK’s unemployment rate at 5% – up from 4.1% when Labour came to power with a number one priority of growing the economy.

Since then, the government’s handling of the economy has centred on its stewardship of the public finances.

The chancellor was accused by business groups of harming private sector investment and employment through hikes to minimum wage levels and employer national insurance contributions.

The Bank has backed the assertion that hiring and staff retention has been hit as a result of those extra costs.

There is also evidence that rising employment costs have been passed on to consumers and contributed to the UK’s stubbornly high rate of inflation of 3.8% – a figure that is now expected to ease considerably in the coming months.

Rachel Reeves has blamed other factors – such as Brexit and the US trade war – for weighing on the economy, leaving her facing a similar black hole to the one she says she inherited from the Conservatives.

Her second budget is due on 26 November.

She said of the latest economic data: “We had the fastest-growing economy in the G7 in the first half of the year, but there’s more to do to build an economy that works for working people.

“At my budget later this month, I will take the fair decisions to build a strong economy that helps us to continue to cut waiting lists, cut the national debt and cut the cost of living.”

Shadow chancellor Sir Mel Stride responded: “Today’s ONS figures show the economy shrank in the latest month, under a Prime Minister and Chancellor who are in office but not in power.”

UK

Scottish government yet to pay up after losing legal battle over definition of a woman

Published

18 hours ago

November 13, 2025

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Scottish government yet to pay up after losing legal battle over definition of a woman

The Scottish government and For Women Scotland’s long-running legal battle over the definition of a woman is yet to come to a close.

For Women Scotland (FWS) won the case in April when the country’s highest court ruled “woman” and “sex” in the Equality Act 2010 refers to “a biological woman and biological sex”.

The Scottish government was ordered to pay a portion of the campaign group’s legal costs.

FWS told Sky News the bill of costs for the Supreme Court element of the case was more than £270,000, however various parts have reportedly been disputed by the Scottish government.

That has now been submitted to the court for determination and a decision is awaited.

The Outer and Inner House element of the case at the Court of Session in Edinburgh was said to be more than £150,000.

Trina Budge, co-director of FWS, said the group is also due an uplift – a small percentage of the final expenses awarded.

Ms Budge claimed Scottish ministers are yet to enter into any negotiations on settlement and a date has been set in January for a hearing before the Auditor of the Court of Session to confirm the amount the government will have to pay.

Ms Budge said: “The delay always suits the paying party but I think it’s quite unusual to decline to enter into any discussions at all.

“It’s highly likely this is a deliberate tactic in the hope of starving us of funds to prevent us continuing our latest case on the lawfulness of housing male prisoners on the female estate.

“However, it should come as no surprise to the government that we have massive support and we will, of course, be continuing regardless of any sharp practices.”

It is understood the bill of costs for the Supreme Court case was lodged by FWS in August, while the expenses linked to the Court of Session action was submitted in September.

Figures revealed by a recent Freedom of Information (FOI) request show the Scottish government has spent at least £374,000 on the case.

Final costs are yet to be confirmed but will be published once complete.

A Scottish government spokesperson said: “There is an established process to be undertaken to agree the final costs for a legal case and these will be calculated and published in due course.”

In August, FWS lodged fresh action at the Court of Session.

The group claimed Holyrood’s guidance on transgender pupils in schools and the Scottish Prison Service’s (SPS) policy on the management of transgender people in custody were both in “clear breach of the law” and “inconsistent” with the Supreme Court judgment.

The following month, the Scottish government issued updated guidance which said schools across the nation must provide separate toilets for boys and girls on the basis of biological sex.

If possible, schools can also provide gender neutral toilets for transgender students.

However, court proceedings continue over transgender prisoners.

Current SPS guidance allows for a transgender woman to be admitted into the female estate if the inmate does not meet the violence against women and girls criteria, and there is no other basis “to suppose” they could pose an “unacceptable risk of harm” to those also housed there.

First Minister John Swinney and Justice Secretary Angela Constance have both dodged questions on the case, citing it would be inappropriate to comment on live court proceedings.

On Tuesday, Ms Constance was accused by former Scottish Tory leader Douglas Ross of “misleading” Holyrood, saying she could give full answers under contempt of court legislation.

Scottish Tory MSP Tess White, the party’s equalities spokesperson, added she was “spine-chillingly concerned” of a repeat of the Isla Bryson case.

Bryson, a transgender woman born Adam Graham, was initially sent to a women-only prison despite being convicted of raping two women.

The offender was later transferred to the male estate following a public outcry.

Speaking to Sky News, Ms White said: “John Swinney was quick to waste taxpayers’ money fighting a case which confirmed what the vast majority of the public knew beforehand: a woman is an adult human female.”

The MSP for North East Scotland urged the SNP administration to “pay up and finally respect the clear judgment from the Supreme Court”.

A Scottish government spokesperson said: “It is the Scottish government’s long-held position that it is inappropriate for Scottish ministers to comment on live litigation.

“In all cases, we have an obligation to uphold the independence of the judiciary. We do not want the government to ever be seen as interfering in the work of the independent courts.”