Rachel Reeves orders Shadow Cabinet not to make unfunded spending promises before next election
Sir Keir Starmer and Rachel Reeves have formally ordered the Shadow Cabinet not to make any unfunded spending pledges ahead of the next general election, i can reveal.
The Labour leader and Shadow Chancellor moved to stamp their authority on the top team with a stern warning that any loose promises by frontbenchers risk gifting the Tories a key political weapon.
The move follows claims by the Institute for Fiscal Studies (IFS), reported by i last week, that the party could struggle to pay for its more ambitious policies without putting up taxes, claims pounced on by the Conservatives.
Reeves and Shadow Treasury Chief Secretary Pat McFadden effectively âread the riot actâ to their colleagues during a meeting of Starmerâs top team in the Commons this afternoon.
The pair simultaneously sent the Shadow Cabinet a formal letter that declared âthere will be no unfunded spending commitments â if something is not signed off, it is not policyâ.
âThe economy is the territory on which the next general election will be fought, and Labourâs fiscal responsibility must be the foundation on which we build our campaign, â the letter stated.
âIt is important that everyone appreciates the high level of scrutiny we are under. The test of being trusted with the public finances is not optional â it is essential â and if we pass it, it gives us the space to talk to the electorate about how a Labour Government will transform Britain.â
Reeves and McFadden also warned that âevents over recent weeks have told us more about how the Tories are likely to attack us during the electionâ.
âThey are not going to run on their record because it is so abysmal â failing public services, higher taxes and the Tory mortgage penalty. And they wonât run on their plans for the future â because they have none.
âInstead, they will do whatever they can to portray Labour as a risk on fiscal responsibility â on taxation, borrowing and spending. We will not allow this and will not give the Tory Party the election campaign they want to fight..â
The letter states that Starmer and his Shadow Treasury team want to ram home âthe importance of demonstrating to the public that Labour can be trusted to treat taxpayersâ money with care, and to grow the economy for the benefit of working peopleâ.
Last week, an i analysis suggested Labourâs policies may require an additional ÂŁ20bn of funding every year â the equivalent of raising the basic rate of income tax by more than 3p â beyond that already promised through small tax increases such as imposing VAT on private school fees and ending non-domiciled tax status.
Among the spending floated by the party has been the extension of childcare to youngsters aged 11 and under, estimated at between ÂŁ13bn and ÂŁ18bn, plus a ÂŁ5.5bn restoration of the foreign aid spending target to 0.7 per cent of GDP and a ÂŁ1bn âcontingency fundâ for the energy industry.
Some Shadow Cabinet ministers have also expressed concern that their loose-lipped colleagues had effectively committed the party to âbillions of poundsâ in spending on a full Northern Powerhouse Rail link and on extending the HS2 link to Leeds.
Labour insisted that none of the pledges was official party policy, but Tory chairman Greg Hands pounced on the IFS remarks last week to declare Starmerâs âmask has slippedâ.
The partyâs main capital spending promise is a âgreen prosperity planâ worth ÂŁ28bn, a policy that the IFSâs Paul Johnson suggested could drive up the total stock of Government debt, currently totalling just under 100 per cent of GDP.
A senior party figure told i: âWeâre doing this to tell the Shadow Cabinet the need for fiscal discipline in everything we do. Trussâs mini-Budget disaster puts an even bigger responsibility on us to stay disciplined.â
Reeves and McFaddenâs letter added that the Conservatives âare not going to run on their record because it is so abysmal â failing public services, higher taxes and the Tory mortgage penaltyâ.
âAnd they wonât run on their plans for the future â because they have none. Instead, they will do whatever they can to portray Labour as a risk on fiscal responsibility â on taxation, borrowing and spending. We will not allow this and will not give the Tory Party the election campaign they want to fight.â
One source said after the meeting that there was âreal agreement on spending discipline on our side and to take the fight to the Tories over the mini-Budget of last year, and its ongoing impact on mortgage holders.â