While Sir Keir Starmer’s administration has been fiscally irresponsible, the Labour MPs and trade union barons putting Andy Burnham in No 10 want nothing less than fiscal recklessness.
The OBR is warning of a massive fiscal gap, while making clear higher taxes would be counterproductive. Labour’s £25bn annual rise in National Insurance contributions (NICs) has cost jobs, says the fiscal watchdog, seriously slowing the economy.
Meanwhile, this Government’s changes to capital gains tax (CGT), lowering the threshold and upping the rate, have stymied investment and the crystallisation of gains. Back in October 2024, the OBR was forecasting total CGT receipts of £159bn by 2029. After Labour’s tax increases, that same official five-year forecast has plunged to £136bn.
Britain may well have reached “peak taxation”.
In the early 1990s, after Margaret Thatcher “rolled back the frontiers of the state”, tax revenues dipped below 30pc of GDP. That tax burden was 33pc by 2010, after the “New Labour” era, before rising to a post-war high of 36pc under successive Tory governments before Starmer took power.
Labour has since raised taxes faster than in any major economy. Now an unprecedented 38pc of GDP, Britain’s tax burden is set to surge even more – reaching a previously unthinkable 42pc by the early 2030s, according to the International Monetary Fund.
Yet still, Labour wants more.
Burnham’s government looks set to lower the threshold for the incoming “mansion tax”, further jack up CGT and add NICs to rental income.
