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Labor is poised to resist calls to raise taxes on the rich to plug a £20bn spending black hole after Jeremy Hunt stole party policy in his pre-election budget.
Sir Keir Starmer and Rachel Reeves are under pressure to explain how they will fund their major spending pledges after vowing to support tax cuts announced by the government.
Some Labor MPs on Wednesday night called for the party to adopt more radical economic policies in a bid to create a clear dividing line with the Conservative Party. But shadow ministers insist there is no rush to make any major decisions in the wake of the Budget.
Mr Hunt announced before the general election that there would be no spending review detailing the exact funding of Whitehall departments from 2025 onwards.
This means that if Labor were to come to power, Reeves as chancellor would have just months, or even weeks, to put together a spending plan based on the existing overall funding framework. . This suggests that after adjusting for inflation, government spending increases by 1% each year.
The Institute for Fiscal Studies estimates that most sectors will suffer a total cut of around £20bn, taking into account the need for increased funding for health, childcare and defence.
Paul Johnson, director of the think tank, said: “Whoever is prime minister at the next spending review could have chosen a different job.”
Mr Hunt used the Budget to adopt Labour’s policy of abolishing non-tax status for wealthy foreigners living in the UK. This currently allows non-British citizens to avoid paying tax on their income. The Chancellor said the changes would raise £2.7bn a year, money that Labor had earmarked for extra spending on the NHS and school breakfast clubs.
The current system will be replaced by new rules that will allow people moving to the UK to protect income earned around the world from UK tax for up to four years. Rishi Sunak, whose wife previously claimed non-dom status for tax purposes, has recused herself from discussion of the decision.
The Prime Minister also pledged to extend the windfall tax on oil and gas companies, echoing Labour’s plans.
Sir Keir said: “We have been campaigning across Parliament to reduce the tax burden on working people, and we are not going to stop now, so I support a reduction in National Insurance from today.”
A Labor Party spokesperson said the party would announce new ways to fund spending commitments that were previously funded by abolishing non-dam status “in our own time”. Ta.
A source close to the shadow chancellor said Mr Reeves remained opposed to any proposals to increase wealth tax (such as Ed Miliband’s ‘manor tax’ when he was Labor leader). Other options for filling the fiscal hole without increasing borrowing include raising taxes on companies that cause pollution or harming public health, and reforming business tax credits. .
Leading backer Stella Creasy urged Labor not to fully embrace the Conservatives’ tax and spending plans.Writer I, she said: “We cannot fix public services, cut taxes, foster long-term growth and encourage investment at the same time. For a better future, something must give and more must change. No. And Labor needs the confidence to say that.”
Another MP said: “Labour will have to find some policy that sets out a different direction for the country to go in terms of the economy. Otherwise it will become the midwife of austerity 2.0 and the country will have to It would be a disaster.”
But shadow ministers insisted they were not worried about the Prime Minister’s tax trap. One said the anti-Dom ploy was “not a problem” as “we expected this move”, while another frontbencher said: “The people are being taxed the most since the war. “The debt is still rising and the fiscal drag is huge,” he added.
Another senior official said: “This is a pre-election blowout budget designed to save the government, but Tory MPs look miserable when they present the budget because they know it’s not enough.” “It was,” he said.
Shadow Business Secretary Jonathan Reynolds said: LBC: “We can judge you, Jeremy Hunt, we can judge the Conservative Party by your record…Standards of living are falling, people are paying higher taxes and public services are not good enough. Jabber Jabber If you are so confident, let’s hold a general election.”