General election round-up: Fiscal fisticuffs, a DWP shake-up and a £1bn boost for HMRC

Civil Service World looks at what the main parties have said this week – and the impact for the civil service
Keir Starmer and Rishi Sunak at the start of Tuesday's debate Photo: ITV/YouTube

By Jim Dunton

07 Jun 2024

After a "phoney war" of sorts, the 2024 general election campaign felt like it got serious this week – even though there's still no sign of a manifesto from any of the main parties.

Prime minister Rishi Sunak and Sir Keir Starmer's live head-to-head "debate" on ITV proved less than illuminating in policy terms. But Sunak's disputed claims about the cost of previously-floated Labour Party policies brought the campaign's first real flashpoint.

The suggestion that "independent" HM Treasury officials had costed Labour policies and concluded that they would cost each household in the country £2,000 (or £2,094 to be precise) will also have rung untrue with civil servants watching the debate. Less because of the numbers than the suggested process.

Tuesday's debate saw Sunak notably further on the front foot than Starmer, who did not rebut the PM's repeated £2,000-tax-hike jabs as forcefully and animatedly as might have been expected from a former director of public prosecutions. The tables quickly turned, however.

First, a letter from Treasury permanent secretary James Bowler emerged in which he distanced officials from the £38bn figure that is at the heart of Sunak's £2,000-per-household claim, and which also features in a Conservative Party campaign document.

"Civil servants were not involved in the production or presentation of the Conservative Party's document 'Labour's Tax Rises' or in the calculation of the total figure used," he said.

Bowler said the £38bn figure used "costs beyond those provided by the civil service and published online by HM Treasury".

He added: "Any costings derived from other sources or produced by other organisations should not be presented as having been produced by the civil service."

UK Statistics Authority chair Sir Robert Chote subsequently said Sunak's conduct had been damaging for public trust.

Despite his failure to robustly challenge Sunak in Tuesday's TV debate, Starmer subsequently said the PM had "breached the ministerial code because he lied and he lied deliberately" in relation to the £2,000 claim.

"We have made clear that our plans are fully costed, fully funded, they do not involve tax rises for working people – so that’s no income tax rise, no national insurance rise, no VAT rise," Starmer said.

"The prime minister, with his back against the wall, desperately trying to defend his awful record in office, resorted to lies and he knew what he was doing, he knew very well what he was doing."

Sunak stood by his claims in an interview with ITV recorded yesterday, for broadcast in full next week. Asked whether the numbers were really based on assumptions framed by Conservative advisors, the PM said: "No. The analysis and the working is done by Treasury officials."

He has, however, apologised for leaving commemorations in Normandy marking the 80th anniversary of the D-Day landings early to do the interview, saying it had been "a mistake not to stay in France longer".

ITV said the interview with Sunak had been conducted yesterday because it was the slot proposed by Sunak's team.

Silver lining?

If there's an upside for the week's major wrangle, it could be that the £2,000-tax-hike debacle could bring the highly fragile state of the nation's finances to the fore at a time when both Conservatives and Labour are seemingly committed to increasing public spending by just 1% a year.

But it didn't happen on Tuesday night, when both Sunak and Starmer shied away from broaching the subject of service cuts: The PM insisted "record sums" would continue to be invested in public services, while Starmer said there would be no return to austerity.

Institute for Fiscal Studies director Paul Johnson said the failure of either man to acknowledge that the state of the nation's finances would require some combination of service cuts, tax rises or increased debt was "very frustrating" but "not surprising".

"[We are] in a situation in which we know that prisons are full; the backlogs in the courts are enormous; local authorities keep going bust; the social care system is under incredible pressure... pressures on public sector pay, and so on," he said.

"There are lots and lots of pressures, so it's very – I'm not saying it's impossible – but it would certainly be hard to to make those cuts.

"And, of course, neither party is saying anything about where are those cuts would come – nor are they saying: 'Well, we're definitely not going to put those cuts in place'. Because if you don't put those cuts in place, then you have to say how you're going to balance the books – which means either raising taxes or having the debt rising, rather than falling, at the end of the parliament."

Labour plans DWP shake-up

In a pre-manifesto policy pledge, Labour has this week accused the Department for Work and Pensions of having "lost its focus on work" and ceased being the department for "increasing employment, spreading opportunity or powering the economy".

As part of a plan to get a further 2 million people into work and deliver the highest employment levels in the G7, the party said it would introduce "a major programme of reform" to support more people into work.

Its vision includes creating a new combined national jobs and careers service that would bring together DWP's job centre plus and the National Careers Service, which is funded by the Department for Work and Pensions.

Labour said the move would get more people into work and provide those seeking new opportunities with the means to find better paid work.

Among its ambitions for the rejigged offer are better support to get more people with health conditions and disabilities into work, and a "youth guarantee" on opportunities for training, apprenticeships or help to find work for 18-21 year-olds.

Lib Dems eye £1bn boost for HMRC

The Liberal Democrats set out proposals to give new parents more generous leave from work and increase the public health grant paid to local authorities, both funded by a crackdown on tax avoidance and evasion.

Under its plans, education spokesperson Munira Wilson said HM Revenue and Customs would receive a funding boost of £1bn for compliance work, which she said would generate returns of seven times as much.

Wilson told BBC Radio 4's Today programme that the investment would "improve the resources [and] technology to tackle tax avoidance and evasion" at HMRC and drive down the so-called "tax gap", which is the difference between tax owed and what is collected.

"We're not saying we would be able to close the entire tax gap, which is some £36bn," she said. "We're saying about £7bn could be clawed back, which is a conservative estimate."

The party's plans to give more financial support to new parents include a "dad month" paid at 90% of earnings, a significant uplift on the current two-week statutory paternity leave offer, which has pay capped at £184 a week. Statutory maternity pay would be increased to £350 a week.

The Lib-Dems' public health grant proposals are billed as reversing cuts to the grant since 2015, and framed as a £1bn-a-year uplift.

The party said the increased funding would help pay for health checks for 40-74 year olds, health visits for infants and their mothers, and wider access to blood pressure tests – all of which would reduce pressure on NHS services.

In April, Labour pledged to boost the size of HMRC by 5,000 officials as part of a plan to raise an additional £5.1bn a year through tax compliance. It said the proceeds would be spent on the NHS and schools.

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