Keir Starmer sets out plans to raise £8.6bn in tax at Labour manifesto launch

Sir Keir Starmer set out plans to raise £8.6bn in tax in the Labour manifesto on Thursday as he promised to “relight the fires” of economic growth and bring “Conservative chaos” to an end.

The figure, which includes a clampdown on tax avoidance and evasion, came as the Labour leader set out a pitch to voters ahead of the July 4 UK general election that contrasted with more than £17bn in tax cuts pledged by Prime Minister Rishi Sunak.

Labour’s manifesto, which has been attacked by the Conservatives as a “tax trap” and from the left for being overly cautious, is at the heart of its bid to regain power after 14 years of Tory rule.

At the manifesto launch in Manchester, Starmer pledged to “relight the fires of renewal” across the UK with a “plan for growth” and an approach that was both “pro-worker and pro-business”.

He added that “for working people, we are not going to increase their taxes”.

Labour has been wary of jeopardising its 20-point opinion poll lead over the Conservatives and the manifesto almost exclusively contained previously announced plans.

The £8.6bn the party intends to raise 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 a windfall tax on oil and gas companies, along with £3.5bn a year of extra borrowing, to fund a slimmed-down green prosperity plan, through which it would invest in renewable energy projects.

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Starmer said his goal to “get Britain building again”, which includes planning and energy reforms, would stimulate the UK economy.

But economists are sceptical that Labour could generate growth sufficiently rapidly to solve the UK’s immediate fiscal problems.

Paul Johnson, director of the Institute for Fiscal Studies, said the manifesto contained a “dizzying number” of strategies to tackle the country’s challenges.

But he added the spending increases Labour promised were “tiny, going on trivial” and the proposed tax rises “even more trivial”.

As a result, he said, Labour had no fiscal room to avoid the “cuts both to investment spending and to spending on unprotected public services” planned by the current government.

The increased spending set out in the 134-page document totals £9.5bn a year. This included 6,500 new teachers in state schools, 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 approach. “I’m running as the candidate to be prime minister, not 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.

On capital gains tax and pension tax relief, the party said only that it has “no plans” to raise taxes rather than ruling them out entirely.

Labour has been at pains to present itself as a centrist, pro-business party, by contrast with the radical leftwing leadership of Jeremy Corbyn, whom Starmer succeeded in 2020.

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.”

Other policies highlighted by Starmer on Thursday included Labour’s package of employment reforms, dubbed a “new deal for working people”, more devolution away from London and giving teenagers aged 16 and 17 the right to vote in all elections in England for the first time.

Labour would also remove the right of hereditary peers to sit in the House of Lords and introduce a mandatory retirement age of 80 — with a long-term commitment to replace parliament’s upper house with a “more representative” body.

Asked about the contrast between his tax-raising 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.

Because there are 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.

Letter in response to this article:

Two of Labour’s flag­ship tax policies in the spot­light / From Tre­vor Lyttleton, Lon­don NW11, UK