The Guardian view on Labour's tough choices: they are costing the government dearly
The Labour government's abrupt U-turn on winter fuel payments – restoring the benefit to more than three-quarters of pensioners – reveals less a change of heart than a sobering realisation in Westminster: after years of austerity, the public no longer gives politicians the benefit of the doubt. The irony is hard to miss. Labour set out to prove that 'grown-up' economics means difficult decisions – only to find that once trust is lost, voters won't accept vague promises without tangible results.
It turns out many are sceptical that sacrifices will produce better results for society. That's why ministers are struggling to justify cuts to disability benefits as a way to 'fund' public services – or to convince the public that Britain can't afford to lift the two-child benefit cap even as ministers claim they will reduce child poverty. There may be more conspicuous retreats ahead for the government.
Sir Keir Starmer and his chancellor, Rachel Reeves, had wanted a series of symbolic breaks with Labour's traditional base to prove that only by making tough choices could they deliver £113bn in new public investment. Instead, the last year has become a cautionary tale: ministers elected to repudiate Tory austerity are now seen to be replicating it – and voters have noticed, with Labour's poll numbers sliding as a result. In such a climate, appeals to fiscal rectitude don't receive gratitude but suspicion. The government's volte-face over pensioner benefits only reinforces the sense it was driven by a backlash, not conviction.
This dynamic isn't new but it has radically reshaped Labour's own base – and should be a warning to the party for its future. Working-class voters once formed Labour's backbone; now many vote for no one at all. This isn't about lacking education or income. Throughout the postwar decades, working-class turnout matched that of the middle classes. As Geoffrey Evans and James Tilley of Oxford University wrote in their book The New Politics of Class, the drop came only when their political representation vanished. As parties converged and Labour abandoned its working-class roots, political choice disappeared. Labour's traditional base didn't stop voting because they couldn't – they stopped because there was nothing left to vote for. Brexit reshaped politics, but not as radically as many claim.
Today's class politics has been built on culture wars and channelled through identity and belonging. The warning by the former Bank of England chief economist Andy Haldane that Nigel Farage is now seen by many as the closest thing Britain has to a 'tribune for the working class' should be taken seriously. Citing Reform UK's surge in the polls, he pointed to a 'moral rupture' between voters and mainstream politicians, accusing Labour of fuelling disillusionment through a weak growth strategy and unpopular decisions on benefits. While not declaring Reform the definitive working-class party, Mr Haldane stressed that what matters is perception – and right now, many working-class voters believe Mr Farage speaks for them more than anyone else.
Labour's spending review this week looks like an attempt to reframe its offer around extra cash for frontline services such as health and education. That is welcome. Less so will be the real-terms cuts in unprotected departments that Ms Reeves's fiscal rules demand to account for such commitments. If this reset is not visible and felt by voters soon, the door swings open wider to Mr Farage and his hard-right politics.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Independent
33 minutes ago
- The Independent
Fact check: 2025 spending review claims
This round-up of claims from the 2025 spending review has been compiled by Full Fact, the UK's largest fact checking charity working to find, expose and counter the harms of bad information. On Wednesday Chancellor of the Exchequer Rachel Reeves delivered the Labour Government's first spending review, outlining its spending plans for the next few years. We've taken a look at some of the key claims. How much is spending increasing by? At the start of her speech Ms Reeves announced that 'total departmental budgets will grow by 2.3% a year in real terms'. That headline figure doesn't tell the full story, however. Firstly, 2.3% is the average annual real-terms growth in total departmental budgets between 2023/24 and 2028/29. That means it includes spending changes that have already been implemented, for both the current (2025/26) and previous (2024/25) financial years. The average annual increase between this year and 2028/29 is 1.5%. Therefore, as the Institute for Fiscal Studies (IFS) has said, 'most departments will have larger real-terms budgets at the end of the Parliament than the beginning, but in many cases much of that extra cash will have arrived by April'. Secondly, it's worth noting that the 2.3% figure includes both day-to-day (Resource DEL) and investment (Capital DEL) spending. Capital spending (which funds things like infrastructure projects) is increasing by 3.6% a year on average in real terms between 2023/24 and 2029/30, and by 1.8% between 2025/26 and 2029/30. Day-to-day departmental budgets meanwhile are seeing a smaller average annual real-terms increase – of 1.7% between 2023/24 and 2028/29 and 1.2% between 2025/26 and 2028/29. Which departments are the winners and losers? Ms Reeves touted substantial spending increases in some areas (for example, the 3% rise in day-to-day NHS spending in England), but unsurprisingly her statement did not focus on areas where spending will decrease. Changes to Government spending are not uniform across all departments, and alongside increases in spending on things like the NHS, defence and the justice system, a number of Government departments will see their budgets decrease in real terms. Departments facing real-terms reductions in overall and day-to-day spending include the Foreign, Commonwealth and Development Office (this factors in reductions in aid spending announced earlier this year to offset increased defence spending), the Home Office (although the Government says the Home Office's budget grows in real terms if a planned reduction in asylum spending is excluded) and the Department for Environment, Food and Rural Affairs. Did the Conservatives leave a '£22 billion black hole'? Ms Reeves made a claim we've heard a number of times since it first surfaced in July 2024 – that the previous Conservative government left a '£22 billion black hole in the public finances'. That figure comes from a Treasury audit that forecast a £22 billion overspend in departmental day-to-day spending in 2024/25, but the extent to which it was unexpected or inherited is disputed. The IFS said last year that some of the pressures the Government claimed contributed to this so-called 'black hole' could have been anticipated, but others did 'indeed seem to be greater than could be discerned from the outside'. An Office for Budget Responsibility (OBR) review of its March 2024 forecast found an estimated £9.5 billion of additional spending pressures were known to the Treasury at that point in time, but were not known to the OBR as it prepared its forecast. It's true that this review didn't confirm the £22 billion figure, but it also did not necessarily prove that it was incorrect, because Labour's figure included pressures which were identified after the OBR prepared its forecast and so were beyond the scope of the OBR's review. We've written more about how the Government reached the figure of £22 billion in our explainer on this topic. How big is the increase in NHS appointments? Ms Reeves took the opportunity to congratulate Health Secretary Wes Streeting for delivering 'three-and-a-half million extra' hospital appointments in England. The Government has previously celebrated this as a 'massive increase', particularly in light of its manifesto pledge to deliver an extra two million appointments a year. Ms Reeves' claim was broadly accurate – data published last month shows there were 3.6 million additional appointments between July 2024 and February 2025 compared to the previous year. But importantly that increase is actually smaller than the 4.2 million rise that happened in the equivalent period the year before, under the Conservative government – as data obtained by Full Fact under the Freedom of Information Act and published last month revealed. What do announcements on asylum hotels, policing, nurseries and more mean for the Government's pledges? Ms Reeves made a number of announcements that appear to directly impact the delivery of several pre-existing Labour pledges, many of which we're already monitoring in our Government Tracker. (We'll be updating the tracker to reflect these announcements in due course, and reviewing how we rate progress on pledges as necessary). The Chancellor announced an average increase in 'police spending power' of 2.3% a year in real terms over the course of the review period, which she said was the equivalent of an additional £2 billion. However, as police budgets comprise a mix of central Government funding and local council tax receipts, some of this extra spending is expected to be funded by increases in council tax precepts. Ms Reeves said this funding would help the Government achieve its commitment of 'putting 13,000 additional police officers, PCSOs and special constables into neighbourhood policing roles in England and Wales', a pledge we're monitoring here. The spending review also includes funding of 'almost £370 million across the next four years to support the Government's commitment to deliver school-based nurseries across England', which Ms Reeves said would help the Government deliver its pledge to have 'a record number of children being school-ready'. The Chancellor also committed to ending the use of hotels to house asylum seekers by the end of this Parliament, with an additional £200 million announced to 'accelerate the transformation of the asylum system'. When we looked last month at progress on the Government's pledge to 'end asylum hotels' we said it appeared off track, as figures showed the number of asylum seekers housed in hotels was higher at the end of March 2025 than it was when Labour came into Government.
Daily Mail
34 minutes ago
- Daily Mail
A reckless splurge we (and our children) will be paying off for years: Voters brace for tax hikes as Rachel Reeves embarks on unprecedented spending spree
Voters were last night braced for swingeing tax rises, after Rachel Reeves embarked on an unprecedented spending spree. In a return to Labour 's tax-and-spend approach, the Chancellor set out plans to 'invest' a staggering £4 trillion to fund 'the renewal of Britain'. She said the plans, which include another huge dollop of cash for the NHS, would end the 'destructive' austerity of the last government and boost economic growth. Labour strategists hope the costly gamble will pay off by cutting hospital waiting lists, improving the creaking infrastructure and pump-priming the economy. But experts warned the scale of the spending, coupled with the deteriorating public finances, will pave the way for another round of damaging tax rises this autumn. The Conservatives accused Ms Reeves of adopting a reckless 'spend now, tax later' approach. The Chancellor insisted her plans could be funded by the eye-watering tax rises she imposed last year. She refused to rule out tax rises this autumn, saying only that taxes 'won't have to go up to pay for what's in this Spending Review'. But the small print of yesterday's Treasury document already includes one significant new tax hike, with the Chancellor pencilling in council tax hikes that will add more than £350 to an average Band D bill by 2029 to help fund local services and the police. Asked to rule out further tax rises, Treasury minister Emma Reynolds said: 'I'm not ruling it in, I'm not ruling it out.' Shadow Chancellor Mel Stride said Ms Reeves had 'completely lost control' of the public finances and the Spending Review was 'not worth the paper it is written on'. He predicted that a 'Corbynist catalogue' of tax rises would follow this autumn. Mr Stride told MPs: 'This is the spend now, tax later review, because the Chancellor knows that she will need to come back here in the autumn with yet more taxes, and a cruel summer of speculation awaits.' Paul Johnson, director of the Institute for Fiscal Studies, said the public finances were so tight that the Chancellor would need further tax rises if 'anything at all goes wrong with the current economic forecasts'. Tom Clougherty, of the Institute of Economic Affairs, said Ms Reeves had failed to address the crisis in the public finances, adding: 'We should brace ourselves for tax increases in the autumn, and a summer of speculation over exactly where they will fall.' On a day that will frame the political debate for the next election: Police chiefs warned of cuts to the front line, after Yvette Cooper emerged as one of the few losers from the spending bonanza; Ms Reeves piled further pressure on the Home Secretary by announcing a target to empty Britain's asylum hotels by the next election; The Chancellor said new funding for the health service would deliver an extra four million tests and procedures by the end of the decade; NHS chiefs said much of the extra cash would go to fund above-inflation pay rises for doctors and nurses; Ms Reeves suggested defence spending will be frozen at 2.6 per cent of GDP in the latter years of this parliament, despite Nato pressure to double it to 5 per cent; Deputy Prime Minister Angela Rayner secured a £39 billion boost for social housing after weeks of bruising battles with the Treasury; Ms Reeves ripped up the Treasury's value-for-money rules in order to pour cash into Red Wall seats where Labour is being challenged by Reform; She announced £15 billion for transport projects including a revamped 'Northern Powerhouse' rail project. Yesterday's Spending Review covers government plans for the next three years. Treasury sources said it totalled £4 trillion. Day-to-day spending is £190 billion higher than planned by the last Conservative government, while spending on capital projects is £113 billion higher. But the figures do not include the soaring welfare bill, or the cost of servicing the UK's debt mountain, which totals more than £100 billion a year. The review also relies on implausible plans to achieve efficiency savings of £12 billion a year. Any of these factors could tip Ms Reeves into breaking her fiscal rules later this year. She has yet to set out how she will pay for a U-turn on winter fuel payments, which is forecast to cost £1.25 billion. And she is under pressure from Labour MPs to end the two-child benefit cap at a cost of £3.5 billion and to scrap planned cuts to disability benefits totalling £5 billion. Labour's former shadow chancellor John McDonnell welcomed the spending on long-term capital investment but said Labour had to 'learn the lessons' of the winter fuel debacle and loosen the purse strings on welfare. He told Sky News: 'We cannot be seen as the austerity party by imposing cuts on the poorest in society... There will have to be tax increases – we need redistribution.' The spending package follows months of bitter Cabinet infighting over how to allocate government spending for the coming years. The Chancellor yesterday said her choices would deliver on the public's priorities. She said her 'driving purpose' was 'to make working people, in all parts of our country, better off'. But she acknowledged that many voters had yet to feel any difference from Labour's first year in office.
Times
41 minutes ago
- Times
Date of ‘tax freedom day' is latest for 40 years
The tax burden on workers is greater than at any time over the past 40 years and is likely to rise to a record level within three years, according to a free-market think tank. The Adam Smith Institute says 'tax freedom' day falls on Thursday, six days later than last year and 20 days later than before the pandemic. It has not been this late in the year since 1985 when the Thatcher government was attempting to rectify the disastrous public finances after the economic crises of the 1970s. Tax freedom day is a symbolic indication of how long into the year the average person would have to work to pay their annual tax bill, with all money earned thereafter going to themselves. The think tank says that under government tax and spending plans, tax freedom day in 2028 will not arrive until June 24, which would be its latest date. That would make the tax burden higher than it was during the Second World War or the Napoleonic Wars. It adds that tax freedom day could fall more than halfway through the year as soon as 2030 unless the government changes course, meaning taxation will exceed 50 per cent of net national income for the first time. This year, the 'cost of government day', which factors in borrowing as well as taxes, is July 22, the latest date since the pandemic. The think tank has also released data showing the extent to which the tax burden is being shouldered by the rich. It reports that in the last tax year, the top 1 per cent of earners paid 28.2 per cent of total tax liabilities with the top 10 per cent paying 60.2 per cent. It noted: 'With their share of liabilities steadily increasing over the last 25 years, many wealthy taxpayers are leaving the UK altogether.' The think tank predicts that Britain is on course to lose a greater proportion of millionaires than any other country over the course of this parliament, 'raising questions about the viability of our current tax regime'. James Lawson, the chairman of the Adam Smith Institute, said: 'Britons are now working nearly half the year just to pay taxes — and the burden is only getting heavier. A tax system that consumes 162 days of our working year is simply not sustainable. It stifles our economic growth, productivity and our long-term prosperity. 'What's even more alarming is that, unless we reverse course, the UK is on track for taxes to swallow more than half of national income by 2030. This would take us beyond anything seen even during the world wars or the economic crises of the 1970s, raising profound questions about the nature of our economic model. He added: 'Politicians from all parties must ask themselves whether they want a country where work is penalised, innovation suppressed, and families see more of their income swallowed by the state each year. If we are serious about turning around our stagnant economy, we must start by cutting taxes.' Sarah Coles, head of personal finance at the investment platform Hargreaves Lansdown, said the freezing of income tax thresholds was where most ordinary people were paying more tax. She said: 'Last tax year, there were 37.7 million taxpayers, and we handed over an eye-watering £301.9 billion in income tax — up 10 per cent in a year and up 37 per cent since 2021-22. The pain is far from over, because these thresholds are frozen until 2028.'
