Labour Wants Lower Taxes, But Where Will the Cash Come From?
Labour’s shadow chancellor Rachel Reeves gave her take on the Sky News Sunday Morning program with Trevor Phillips, saying she’s all for giving working people a tax break. But she’s not asking the government to just hand people a coupon – she wants a concrete plan that explains the source of the money.
Why the Numbers Matter
- Past mistakes: Reeves reminds us that last year, when the Conservatives pushed a wave of unfunded tax cuts, the economy crashed, and mortgage rates shot up like a rocket in a bad dream.
- Her goal: “I want taxes for working people to drop, but it must be affordable,” she explained.
Jeremy Hunt’s “Growth‑First” Pitch
Chancellor Jeremy Hunt told Phillips this upcoming autumn statement will focus on boosting business growth and smashing the barriers that hold businesses back. He confessed that the current tax load is “too high” and that taking it down is “essential to growth.”
Hunt’s Motivation Angle
The Chancellor added that a “productive, dynamic, fizzing economy” needs people to be motivated to work hard and take calculated risks. He says that nurturing this mindset is key to >turning the economy around.
Financial Reality Check by the IFS
- Paul Johnson, head of the Institute for Fiscal Studies: He warns that there’s practically no room for major tax cuts given the state of public finances.
- Key Numbers: At the budget in March, debt was forecast to fall by £6 bn over five years – which is a drop of virtually nothing in a £1 tn budget. “No headroom at all,” he says.
- Hopeful Twist: Johnson mentions “some good news” because tax revenues are now stronger. But he cautions that the Treasury’s finances are still “in such a mess.” He notes it’s easy for the Chancellor to find a few billion in a budget, but that doesn’t solve deeper issues.
Bottom Line
The autumn statement is expected to be all about growth for the country and businesses. Hunt talks about removing obstacles and seizing opportunities, while the IFS signals there’s limited flexibility for new tax cuts. Labour is pushing for lower taxes, but we’re still waiting to see if the government can back it up with solid fiscal plans.
