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 “read the riot act” to their colleagues during a meeting of Starmer’s top team in the Commons this afternoon.
The pair simultaneously sent the Shadow Cabinet a formal letter that declared “there will be no unfunded spending commitments – if something is not signed off, it is not policy”.
“The economy is the territory on which the next general election will be fought, and Labour’s fiscal responsibility must be the foundation on which we build our campaign, “ the letter stated.
“It 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 – it is essential – and if we pass it, it gives us the space to talk to the electorate about how a Labour Government will transform Britain.”
Reeves and McFadden also warned that “events over recent weeks have told us more about how the Tories are likely to attack us during the election”.
“They are not going to run on their record because it is so abysmal – failing public services, higher taxes and the Tory mortgage penalty. And they won’t run on their plans for the future – because they have none.
“Instead, they will do whatever they can to portray Labour as a risk on fiscal responsibility – on taxation, borrowing and spending. We will not allow this and will not give the Tory Party the election campaign they want to fight..”
The letter states that Starmer and his Shadow Treasury team want to ram home “the importance of demonstrating to the public that Labour can be trusted to treat taxpayers’ money with care, and to grow the economy for the benefit of working people”.
Last week, an i analysis suggested Labour’s policies may require an additional £20bn of funding every year – the equivalent of raising the basic rate of income tax by more than 3p – 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 £13bn and £18bn, plus a £5.5bn restoration of the foreign aid spending target to 0.7 per cent of GDP and a £1bn “contingency fund” for the energy industry.
Some Shadow Cabinet ministers have also expressed concern that their loose-lipped colleagues had effectively committed the party to “billions of pounds” 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 Starmer’s “mask has slipped”.
The party’s main capital spending promise is a “green prosperity plan” worth £28bn, a policy that the IFS’s 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: “We’re doing this to tell the Shadow Cabinet the need for fiscal discipline in everything we do. Truss’s mini-Budget disaster puts an even bigger responsibility on us to stay disciplined.”
Reeves and McFadden’s letter added that the Conservatives “are not going to run on their record because it is so abysmal – failing public services, higher taxes and the Tory mortgage penalty”.
“And they won’t run on their plans for the future – because they have none. Instead, they will do whatever they can to portray Labour as a risk on fiscal responsibility – on taxation, borrowing and spending. We will not allow this and will not give the Tory Party the election campaign they want to fight.”
One source said after the meeting that there was “real 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.”