Labour refuses to say how it would fund NHS
Party will reveal plans to pay for extra health spending ‘in our own time’, says shadow chancellor
LABOUR has said it will maintain increased health spending if it wins the next election but has refused to reveal how it would pay for it.
Rachel Reeves, the shadow chancellor, said yesterday it was “not the right thing to do” to reintroduce the National Insurance increase scrapped by Liz Truss in her mini-budget. Despite abandoning almost all of Ms Truss’s tax cuts on Monday, Jeremy Hunt, the Chancellor, maintained the lower rate of National Insurance contributions, which will cost the Treasury £12 billion a year.
Labour has said it would maintain the extra spending on the NHS but has not yet set out how it would be funded.
Asked on BBC Radio 4 yesterday why Labour would not support a tax rise to pay for health, Ms Reeves said: “We are still in the middle of a cost of living crisis, and increasing taxes on ordinary working people and the businesses who employ them in the middle of a cost of living crisis is not the right thing to do.”
A spokesman for Ms Reeves said the party would reveal its plans “in our own time” and would not be forced into tax commitments because of changes in government policy.
Ms Reeves also hinted Labour had changed its position on income tax, following a similar reversal by Mr Hunt this week.
Sir Keir Starmer had previously backed the Government’s planned cut in the basic rate to 19 per cent, but yesterday Ms Reeves said Labour “accept[s] that now is not the right time for further tax cuts”.
A separate Labour policy to increase the NHS workforce will be funded by changes to rules on non-dom tax status.
Meanwhile, Wes Streeting, the shadow health secretary, said Labour was terrified of the state of the NHS it could inherit.
Mr Streeting said an incoming government would face “difficult” funding decisions, but he expected a Labour administration to introduce significant increases in spending – including doubling the number of medics in training.
Mr Streeting said the service was now facing “the biggest crisis in its history”.
He told an event in London: “When I think of what we will inherit as an incoming Labour government it’s incomparable: the scale is huge and it’s terrifying.”
“If there’s – as I suspect – a Labour government after the next election we will not be able to wave a magic wand and improve things overnight.”
Mr Streeting, tipped as a possible rival to Labour leader Keir Starmer, told the event organised by the think tank Reform: “We’ve got to be honest about the damage that’s been done over 12 years – and if it’s taken 12 years to break the National Health Service it’s going to take more than the election of a different government to repair it.
“That’s why we are thinking long term about what we do over a 10-year period, not just to grip the crisis and restore the NHS to where it was, but to reimagine modern healthcare in this country and make sure we have an NHS that is fit for the future.” Mr Streeting said the system needed to modernise to provide 21st-century healthcare, saying that without this, “we could get to a point where voters believe that they are just being asked to pour even more money into a 20th-century model of care – I think they will run out of patience, and the NHS will run out of time”.
He added that a Labour government would face “difficult” decisions about funding, saying that Ms Reeves had been “prudent and cautious” in making spending commitments and taken “quite a lot of flak” for not going further.
Sir Keir Starmer and the shadow chancellor, Rachel Reeves, have inevitably sought to make political hay out of the market turmoil of recent weeks and the Government’s abandonment of its original growth strategy. Buoyed by polls which show that, if a general election were held today, the Conservatives would be heading for a 1997-style defeat, they sense an opportunity for Labour to supplant the Tories as the party most trusted by the voters with the economy.
But what are their plans for that economy? Fresh from berating the Government for its lack of fiscal discipline in pursuing uncosted tax cuts, Ms Reeves yesterday attacked Jeremy Hunt, the new Chancellor, for the opposite crime: pursuing “austerity season two”. Labour might have supported the reversal of the National Insurance rise, but it apparently does not back the spending cuts necessary to pay for it without borrowing.
Indeed, Labour’s attempt to pose as the party of prudence bears little scrutiny. Few details of its plans exist, but those that do point to a continued commitment to tax and spend, even if it has now said all its spending proposals will be “funded”. It wants to scrap non-dom status to give yet more money to the NHS. It wants an even bigger windfall tax on energy firms, based on dubious figures about the industry’s profitability. Sir Keir seems to think that growth can be magicked out of nowhere if you invest enough in green energy.
Moreover, the situation is nothing like the 1990s before Tony Blair took office. Then, the country was enjoying a period of prosperity that was to last right up until the financial crisis. His Labour government could be generous precisely because of the munificent economic bequest left to him by the Conservatives.
At the time of the next election, by contrast, the economic situation is likely to be difficult. The era of ultra low interest rates is over, inflation may still be high, and growth is expected to be poor over the next few years – in part because Liz Truss’s tax cuts are now not going ahead. There will not be the money available for open-handed spending gestures of the type typically favoured by Labour administrations.
That is unless, of course, Sir Keir opts to take his party even further down the economically destructive route of taxing the “wealthy” to fund spending – perhaps, this time, via wealth taxes and other taxation of “excess” profits. Is that what he intends? The public is entitled to know.