One hundred and eighteen days into the Labour government, and we finally get to witness the true meaning of the slogan on the front of the manifesto – Change. It might come as a surprise, given the hefty and historic tax and spending plans outlined by Chancellor Rachel Reeves in the first Labour budget, which contrast sharply with the vague promises in the Labour manifesto. The manifesto only contained a few pages of costings and a commitment to £8bn of tax increases to support additional NHS appointments and more teachers. There was no indication of the £40bn in tax increases and £76bn in additional spending that would follow. This budget marks the largest tax-raising effort since 1993, with significant spending and borrowing for investment. It is undeniably substantial.
During the election campaign, Labour was cautious about discussing tax and spending rises, but now, with a majority in hand, they are boldly moving forward with their plans. However, the question remains whether they have the mandate for the massive new tax and spending commitments. The chancellor justifies these decisions by blaming the Conservatives for overspending and other financial missteps. Yet, some of the blame must also be placed on Labour’s own decisions, such as agreeing to pay increases for public sector workers.
The budget reflects a traditional left-wing approach, similar to the rejected Corbyn manifestos of 2017 and 2019. Despite distancing herself from Corbyn’s policies, Reeves is implementing a tax-heavy budget that echoes some of his proposals. This budget will define the Starmer administration and the future of the country. It represents a significant departure from manifesto promises, with Labour now taking full responsibility for their ambitious plan to rebuild Britain. The gamble is that by protecting workers’ pay and front-loading spending, Labour can show progress by the end of the parliament. It’s a risky move, but they have finally taken action.