Labour would have to raise taxes to fill immediate £2bn black hole, Tories claim

Labour says the claims are 'desperate nonsense'
Labour says the claims are 'desperate nonsense' - Stefan Rousseau/PA

Labour would face an immediate £2 billion “black hole” in their public spending plans which would require early tax rises, the Conservatives have claimed.

The Tories said that Rachel Reeves, the shadow chancellor, would have to announce the tax increase in a Budget as early as September to plug the gap. However, Labour said the claims were “desperate nonsense”.

The Conservatives have pointed to a statement from Sir Keir Starmer that there will be an “immediate injection” of cash into public services if Labour forms a government, along with comments from Ms Reeves that every spending commitment will be “fully funded”.

However, the Tories have claimed that their analysis shows there is a funding shortfall for 2025-26 between Labour’s plans for public services and the tax increases announced in their manifesto, because their revenue-raising measures will not be delivered in full until the final year of the parliament.

They said that an admission from Labour that their plan to charge VAT on private school fees will not come in until the 2025-26 financial year at the earliest means they will be left with a further immediate revenue headache.

Jeremy Hunt, the Chancellor, said that the Labour Party under Jeremy Corbyn provided more detail on its spending plans than Sir Keir and Ms Reeves.

Mr Hunt said: “By only publishing her tax and spending plans for the last year of the parliament, Rachel Reeves was hoping to get through the campaign without explaining the immediate tax rises she will have to implement.

“This is a trick even John McDonnell and [former shadow chancellor] Jeremy Corbyn didn’t try to pull.

“Labour’s repeated refusal to rule out higher council tax and other tax rises this week means there is only one conclusion – Labour will be raising more taxes this year as part of their £2,094 tax bill for working households”.

The Tories have claimed that Sir Keir could seek to raise taxes by carrying out a revaluation of council tax bands in England – something which Labour has denied.

Darren Jones, Labour’s shadow chief secretary to the Treasury, said: “This is more desperate nonsense from a Conservative Party whose manifesto promises £71 billion of unfunded tax cuts and is set to hike mortgages for families by £4,800.

“Not only did Jeremy Hunt admit this himself this week, but he went on to praise Liz Truss and her economy crashing policies, saying he wanted to do it all over again.

Labour’s manifesto is fully funded and fully costed, in contrast to the Tories’ unfunded plans which will lead to higher mortgages.

“The choice on 4th July is clear: stability with a changed Labour Party or five more years of chaos with the Conservatives.”

In the party’s manifesto, Labour has said that “every fiscal event making significant changes to taxation or spending will be subject to an independent Office for Budget Responsibility forecast”.

With the OBR requiring at least 10 weeks to complete its work, the Tories said that the earliest that an incoming Labour government could commit to an “immediate injection” of public sector funding would be Friday September 13

The Tories said that an earlier commitment would only be possible if Labour admits that their “immediate injection” would not constitute a “significant change”.