Labour has three prongs to its tax-and-spend policy ahead of next year’s general election. First and most importantly, it will not borrow more to fund day-to-day spending.
Second, it will not raise taxes – instead, Sir Keir Starmer wants to cut the tax burden as a proportion of GDP. And finally, it will improve the standard of public services, partly through reform but partly by spending more on them.
It is not possible to achieve all three of these goals, at least in the short term. Over time, GDP growth is a remarkable cure for almost everything that ails an economy; but a newly elected government cannot afford to wait.
Labour is not being entirely transparent about its approach. Will it fudge the promise on borrowing, push through stealth tax hikes or keep maintain the current spending levels which many experts believe are unsustainably tight?
The party hates these questions. Its backers make a number of points, some valid and some less so. It is true that Labour sometimes gets a level of scrutiny over its fiscal plans that the Tories can escape; but while there is no doubt that Conservative mismanagement of the economy has had dire results, that is no reason to avoid putting Labour’s plans under the spotlight too, given it is highly likely to be in government by the end of next year.
It is also fair to point out that expecting every cough and spit of Labour’s policies to be fully funded this far from an election is unrealistic – but when Rachel Reeves has put fiscal discipline at the heart of her economic message, she must be held to the standard she sets herself.
Labour is keen to point out that Liz Truss’s proposed borrowing spree caused havoc with the markets and ordinary people’s mortgages. It is only fair that, as the election approaches, it should explain how it will avoid following suit.