The real cost of a Labour government

What a difference a year makes. In June 2024, Keir Starmer and Rachel Reeves unveiled a Labour manifesto which set out plans for an extra £4.8 billion per year of current spending in 2028/29, plus an average of £4.7 billion per year for a scaled-down Green Prosperity Plan. The manifesto pledged that a Labour government would ‘not increase taxes on working people’—which meant no increases in ‘National Insurance, the basic, higher, or additional rates of income tax, or VAT’—and declared that Reeves’ fiscal rules were a ‘non-negotiable’ foundation for economic stability. In the party’s first year in office, Reeves raised spending by £75 billion and taxes by £42 billion, allowing the government to launch ambitious ten-year plans for NHS reform and infrastructure investment. Since early 2025, however, Labour has been sagging in the polls and struggling to regain public confidence. Attempts to restrict Winter Fuel Payments and Personal Independence Payments ended in costly retreats and damaged ministers’ credibility on all sides. Despite hopes that the tax-raising October 2024 budget would be a one-off ‘reset budget’, the Chancellor raised taxes again this autumn in an attempt to make the numbers add up.