Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Sir Keir Starmer branded the Budget the “last desperate act of a party that has failed”, as he said Jeremy Hunt’s mix of tax cuts and rises amounted to the government giving with one hand while taking “even more” with the other.
Responding to the chancellor’s fiscal statement, the Labour leader accused the government of leaving “Britain in recession, the national credit card maxed out, and despite the measures today, the highest tax burden for 70 years”.
He asked, after 14 years of Conservative-led rule, who “feels better off”, invoking the so-called Reagan question, named after then White House candidate Ronald Reagan’s remarks in the final US presidential debate of 1980.
Starmer issued a withering response to Hunt’s abolition of the non-dom tax regime, which had been one of Labour’s flagship fiscal policies.
Hunt’s “desperate” decision to “finally accept Labour’s argument” on the issue showed the government was “totally bereft of ideas”, Starmer told the House of Commons, adding that it was an “intellectual triumph for social democracy”.
Hunt’s move creates a headache for Starmer, however. His party had allocated the £2bn it said the plan would raise to NHS reform and primary school breakfast clubs. The main opposition party must now explain how it will pay for these policies if it wins the election expected this year.
Ahead of the Budget, Wes Streeting, shadow health secretary, sought to play down the impact of the government claiming his party’s policy of abolishing the tax regime for wealthy non-domiciled residents of the UK.
“[Shadow chancellor] Rachel Reeves is a chess player,” he told LBC on Tuesday. “She is already several moves ahead of the chancellor. It will cause us no grief whatsoever.”
While Starmer did not draw attention to it in the Commons on Wednesday, Hunt also borrowed from Labour’s playbook by extending by a year the windfall tax on oil and gas.
The levy of 35 per cent on energy companies’ profits had been due to expire in March 2028. Labour had vowed to extend the tax by 12 months and restructure it, raising the rate to 38 per cent.
Starmer’s party had previously said its plan would raise £10.8bn in the five years from 2024-25, helping fund its £4.7bn a year green prosperity plan.
Hunt’s decision to stick with his existing post-election public spending plans, where spending will rise by 1 per cent in real terms, is better for Labour — if it wins power — than the cuts that had been floated.
But Starmer will still face a difficult inheritance if he enters Downing Street, as cash-strapped public services already show severe signs of strain.
While Labour figures have accused the government of pursuing a “salting the earth” or “scorched earth” approach to the public finances, Starmer’s party is expected to back the Budget.
The Labour leader confirmed his party supported the 2p cut to national insurance and fuel duty freeze announced by Hunt.
At the end of last year Labour did not vote against any part of Hunt’s Autumn Statement, which contained more than 100 individual measures.
Broadly, Starmer and Reeves have shadowed the Conservatives on tax and spend, an attempt to prevent a dividing line emerging in the months before Prime Minister Rishi Sunak calls a general election.
But the Tories have other ideas. Although Britain entered a technical recession at the end of last year, the economy — which is not home turf for Starmer, a former barrister — is the territory on which Sunak’s party wants to fight the election.
In the Budget Hunt said the government was aiming for a “high wage, high skill economy”, adding: “That’s the difference with the Labour party. They will destroy jobs . . . reduce opportunities by halving new apprenticeships and risk family finances with new spending that pushes up tax.”
He also accused the opposition of lacking a growth plan and personally lashed out at Starmer. Hunt quoted Lord Peter Mandelson’s criticism that the Labour leader needed to “shed a few pounds”, adding ordinary families would “shed more than a few pounds” if Labour came to power.
By turns Starmer attacked Hunt and Sunak as the “Chuckle Brothers of decline”, a reference to a comedy double act that started in the 1980s, and the Tory party as “out of touch” with ordinary households.
In coming months the Tories are expected to ramp up assaults on Labour’s plans for a package of new rights for workers and a tax raid on private equity chiefs, which they are framing as “anti-business”.
Labour’s proposal to levy VAT on private school fees, a key revenue raiser, is another of the rare distinctions on fiscal policy to which both parties want to draw attention. Starmer insists it reflects Labour’s progressive values, while the Conservatives have labelled the plan “anti-aspiration”.
