Labour’s agenda is bad news for everyone – except the super rich

Labour’s victory party is over. The hangover will be brutal.

Fourteen years of Conservative failure has wreaked havoc on our public services and the country’s balance sheet.

But Labour’s promise of ‘change’ at the election has now – almost four weeks on from getting into power – given way to the same style of austerity economics that the Conservatives promised would ‘cut the deficit’ and reduce the public debt as far back as 2010.

It’s becoming obvious that we are stuck in a never-ending loop of Labour and the Conservatives taking it in turns to blame each other for ‘crashing the economy’ and ‘spending all the money’.

To their credit, Labour had a good run of positive news in their first few weeks in government. They announced popular measures that we Greens have long campaigned for, such as scrapping the de-facto ban on onshore wind, beginning the process of bringing railways back into public ownership, and finding a resolution to the junior doctors’ strikes.

But all honeymoon periods must come to an end.

The Chancellor of the Exchequer, Rachel Reeves, stunned the country on Monday when she announced a first phase of spending cuts in response to what she claims was an unexpected £22billion black hole in the public finances left by the Conservatives.

The only immediate solution to this unforeseen disaster, claims Labour, is spending cuts. Building new hospitals: paused. Reopening railways: scrapped. All important things that would have brought long term benefits.

But most troubling is the scrapping of universal winter fuel payment to pensioners, terminating a lifeline to all but the very poorest pensioners eligible for pension credit. These are political decisions, fuelled in part by Labour’s refusal to increase tax on those with the broadest shoulders. 

As recently as May – the day before the local elections – Keir Starmer hammered then Prime Minister Sunak with a demand that he ‘rule out taking pensioners’ winter fuel payments off them to help fund his £46bn black hole? It took fewer than three months for now-Prime Minister Starmer and his Labour government to do exactly that.

While Labour claims these decisions were unforeseen, the writing has been on the wall for a long time.

On the day that Labour published their General Election manifesto, I warned: ‘There’s a glaring hole in Labour’s budget. Their refusal to increase taxes on the super-rich means they will be forced to resort to more public spending cuts. With our public services already on their knees after 14 years of Conservative government, we can’t afford to let this happen.’

Similarly, the Institute for Fiscal Studies (IFS) warned in March of a ‘conspiracy of silence’ between both Labour and the Conservatives on how they were going to repair the Government’s finances.

In fact, the IFS analysis of Labour’s manifesto revealed that a Labour government would have ‘literally no room… for any more spending than planned by the current government’. And crucially, they pointed out that those government plans ‘involve cuts both to investment spending and to spending on unprotected public services’.

The only solutions, said the IFS, were ‘either we will get those cuts, or the fiscal targets will be fudged, or taxes will rise’. We didn’t have to wait long to find the answer: the new government has led with the cuts, and laid the foundation for more cuts and tax rises coming in the autumn. 

If there is an additional, unexpected £22bn black hole hidden by the Tories; then this spells disaster. £22bn would be more than four times Labour’s planned increase in public spending; and around three times the increased tax revenue set out in their manifesto.

The real-terms spending cuts that were baked into Labour’s manifesto, described by the IFS as ‘slightly under half the scale of cuts to these areas under the coalition government of the 2010s’, totalled £16bn at the high end.

If an additional £22bn must now be found, then I don’t see how the millions of families struggling through the cost-of-living crisis can hope to find a light at the end of the tunnel without the Government making bold decisions to raise tax on the wealthiest in society.

Labour has made a political choice to cut the winter fuel allowance instead of increasing taxes on the richest in society. This choice was exposed by my fellow Green MP, Adrian Ramsay, when he asked the Chancellor on Monday if she would raise billions of pounds, and protect ordinary people suffering from these cuts by introducing a wealth tax on people with more than £10mn in assets.

Unfortunately, Rachel Reeves sided with the super-rich over the struggling pensioners, replying: ‘We will not be introducing a wealth tax. We want this to be a great place for investors, and a wealth tax would have the opposite effect’.

And so it’s confirmed, it is the policy of this Labour Government that the UK will be a great place for rich investors, but a terribly sad place for pensioners surviving in the bitter winter cold. 

The Chancellor has clearly signalled that more swingeing spending cuts will be coming down the line, and the Labour Government is opposed to any significant tax on the super-rich. If they carry on down this road, the harm caused by Labour’s spending cuts could bite just as hard as those under the Conservatives.

Our four Green MPs will continue to demand that the solution is taxes for the rich, not cuts for the poor.

Do you have a story you’d like to share? Get in touch by emailing jess.austin@metro.co.uk. 

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