Labour will “pull the lever called ‘growth’”, Sir Keir Starmer said as he insisted he will not have to raise taxes on working people if his party wins the election.
Both Labour and the Conservatives have been criticised by Paul Johnson, director of the independent Institute for Fiscal Studies (IFS), for their unwillingness to consider tax increases.
On Sunday, Mr Johnson said: “I wish they would just stop saying what they’re not going to do, because they tie themselves in knots.
“The more that they say ‘We’re not going to increase council tax, we’re not going to increase income tax, national insurance contributions’ and so on, the more they tie themselves into either not being able to raise the money they need or raising it in ways which are actually more damaging.”
The IFS has repeatedly called for both main parties to “level” with the public about trade-offs between taxation, spending and borrowing, arguing that current plans will see real-terms spending cuts for some departments unless more money is found through higher taxes or borrowing.
But speaking to journalists during a campaign visit to Nuneaton, Warwickshire, on Monday, Sir Keir said growth is the answer.
He said: “What Paul Johnson has said is you can’t hope for growth – he’s right about that. You can’t hope for growth, you have to plan for growth.
“The single biggest problem of the last 14 years is we haven’t had significant growth. If we’d had growth in the last 14 years at the same rate as the last Labour government, we’d have tens of billions of pounds to spend on our public services.
“I ran a public service, I care about public services. We are not going back to austerity, but we will pull the lever called ‘growth’.”
He added that Labour would reform public services to get more value for taxpayers’ money and repeated his pledge that a Labour government would not raise income tax, national insurance or VAT.
Sir Keir made his comments on a visit to promote Labour’s new childcare policy, which would see the party create 3,300 new nurseries by repurposing empty school classrooms.
The party said the policy would not only help boost early-years education, but enable 750,000 women to return to work or increase their working hours, helping reduce levels of economic inactivity.
Shadow education secretary Bridget Phillipson said: “Labour’s childcare expansion could empower thousands more women, who want to get back to work or extend their hours, to take that step. Women are worse off than they’ve been in years and can’t get the childcare hours that they were promised by the Tories.
“Labour will create thousands of nurseries across the country to ensure parents can access the childcare they’re entitled to and make work pay for mums.
“Labour will roll up our sleeves to deliver for parents, improve children’s life choices and rebuild Britain.”
Later on Monday, Sir Keir confirmed Labour would not reintroduce the lifetime pension allowance, depriving it of about £800 million in revenue.
The allowance limited the amount people could save in their pension before paying tax to £1.073 million, and was scrapped by Chancellor Jeremy Hunt in 2023.
At the time, shadow chancellor Rachel Reeves said she would reverse the change, but in an interview with LBC on Monday, Sir Keir said Labour had taken the “tough decision” not to do so.
The Labour leader said businesses had criticised “chopping and changing” in economic policy for causing “chaos”, adding the country needed “some stability”.
