The Labour Party manifesto had some contradictions. While Keir Starmer promised no return to austerity and no plans to raise taxes beyond a few specific targets, the reality is that whoever won the election would face tough decisions on tax and spending. Both parties chose to remain silent on these issues to secure votes. However, the upcoming budget will reveal the truth and define Starmer’s term in a way his manifesto did not.
Expectations include significant tax hikes and changes in fiscal rules to allow more borrowing for infrastructure investments. There is anticipation to see which “working people” Starmer aims to protect, as businesses and individuals prepare for potential tax increases. The definition of “working people” excludes those who own assets like property or shares, raising concerns for business owners and Middle England.
There have been recent tweaks to promises made in the manifesto, such as protecting the payslips of working people and increasing the National Living Wage. Labour faces a significant financial gap inherited from the previous government, leading to the need for large tax increases and borrowing. The hope is to blame the current economic challenges on the previous administration while gaining voter understanding.
The budget is expected to go beyond initial expectations, focusing on a new economic settlement that involves significant investments in infrastructure, healthcare, and education. The goal is to show a path towards long-term growth by borrowing to invest in key sectors. While tax rises may cause short-term pain, the government believes it will lead to economic gains in the future.
Challenges lie ahead in convincing the middle class and wealthier voters about potential income squeezes and increased taxes. The government aims to demonstrate that sacrifices now will result in a stronger economy and improved public services in the future. This budget, more than the manifesto, will prove whether it truly represents a change election, as Starmer envisioned.
