The tax truth no politician will speak

Middle-earners need to pay more – not just the wealthy

Today on Arguably, I explore the hard truths the UK needs to confront on tax. This piece is paid but you can read it now by becoming a full subscriber or signing up for a seven-day free trial.

(Fred Duval/Shutterstock)

What has been Keir Starmer’s worst moment? For many, the early decision to withdraw winter fuel payments from pensioners remains the government’s “original sin”. Others cite last summer’s botched attempt to cut welfare spending by £5.5bn as the moment the Prime Minister’s authority crumbled. Or, if you’re a rural Labour MP, it might be the decision to target farmers and pubs with higher taxes.

All of these choices reflect an awkward truth: there isn’t enough money to go around. The latest instance is Starmer’s plan to fund higher defence spending by imposing cuts to all departmental investment budgets, including health, housing and transport. This is a pattern we’ve seen before – infrastructure projects such as road and rail upgrades are often where the axe falls first – but it’s one this government repeatedly promised to end.

Britain’s lack of economic growth ever since the financial crisis is the most obvious problem. Another is the £110bn that goes on debt interest each year, a total that could rise if the bond markets take fright. But the blame also lies with our tax system.