Labor leader Sir Keir Starmer and Shadow Chancellor Rachel Reeves during a visit to Tilbury Freeport, Essex Photo: STEPHAN ROUSSEAU/PA
The Labor left has warned Sir Keir Starmer that he cannot fix a “broken Britain” without “cold money” in the form of tax rises.
The intervention of Momentum, a far-left group set up by supporters of Jeremy Corbyn, came after the party has confirmed that it will not oppose Jeremy Hunt's national insurance cuts.
Rachel Reeves, the shadow chancellor, said Labor would “absolutely” vote to cut the main national insurance rate from 12 per cent. per cent to 10 per cent.
But a Momentum spokesman said the money raised from tax rises was needed to rebuild Britain's schools and hospitals.
“There is no solution to the Tories' broken Britain that would not require large investments,” he said.< /p>
“Labour can't rebuild our crumbling schools, cut huge waiting lists on the NHS or fix our ineffective private health system with vague reforms alone – that requires cold, hard money.
“We can raise tens of billions dollars for these recovery efforts through new taxes on the richest – these popular and urgent steps should be a no-brainer for the Labor leadership.”
Labor will face “tough decisions” when it next comes to power.
Economists warned on Thursday that Reeves would face “a father and mother headache” if Labor wins the next election due to Mr Hunt's £19 billion cuts to departmental spending.
< p>The Institute for Fiscal Studies (IFS) said the shadow chancellor will be forced to make “difficult decisions” within a year of taking power.
Paul Johnson, director of the IFS, said even a small slowdown in economic growth would jeopardize Mr Hunt's debt reduction target.
He said: “Like his predecessors, Mr Hunt has made a modest improvement in the economy . government finance forecasts and spent most of these funds. He spent the advance and told us that at some point in the future he would achieve his goals largely due to unspecified financial constraints.
“We don’t know what he will do in March if the OBR lowers its growth forecasts. Any such downgrade would cause him a big headache.
“More importantly, he or his successor will have a headache when it comes to making the difficult decisions implied by this announcement in a year or so.” two.
“I'm not sure I'd like to be chancellor inheriting this kind of financial situation in a year.”
Possible tax increases in the future
Paul Dales of Capital Economics added that Labour's instinct to spend more means the public could face big tax rises in the coming years.
He said: “Typically Labor prefers to spend more on public services. According to current financial indicators, they will not be able to do this unless they can raise taxes from other areas to finance them.”
Despite this, Ms Reeves said on Thursday Labor would “absolutely” vote for a cut in the tax rate, as well as tax reform for businesses allowing them to keep more of the money they invest.
Shadow The chancellor suggested that the party would not immediately raise income tax thresholds, but would instead focus first on developing the economy as a whole.
She said: “If we can't get out of this doomed loop of low growth, we Unfortunately, in the future we will have a higher tax burden and a deterioration in the quality of public services.”
Ms Reeves said the tax cuts announced this week would not offset the fiscal burden forcing more people to pay taxes.
She suggested that a Labor government would not immediately raise income tax thresholds, focusing first on growing the overall economy.
“In fact, the Autumn Statement yesterday confirmed that the tax burden on families, despite this national tax cut, Insurance will continue to rise over each of the next five years,” she told Times Radio.
“So , this is some relief, but, frankly, it does not compensate for the financial losses.”
Asked whether Labor would unfreeze the thresholds, she said: “I have made it very clear that I want lower taxes on working people, but I am not going to fall into the trap that the Conservatives have fallen into.” last year, that is, taking on the tax liability without saying where the money will come from, because it is a recipe for ruin that caused interest rates and mortgage rates to soar last year and put pensions at risk.
“So my instinct is to lower taxes for working people. But I am not going to take on any unsecured liabilities because financial and economic stability is most important.”
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