By Georgina Lee and Helen Johnson
Rishi Sunak claimed several times in this week’s ITV Leaders’ debate that “there are £2,000 worth of tax rises coming for every working family in this country”.
But does the figure add up?
FactCheck takes a look.
Did the Treasury calculate Labour would cost the taxpayer £38bn?
The Conservatives claim that Labour party policies would add £38bn to public spending over the years 2025-26 to 2028-29.
Assuming that has to be funded by taxes, and dividing the total by the 18 million households in which at least one person works, that’s just over £2,000 spread over four years for the average “working family”.
The details were set out in a Conservative party document called “Labour’s Tax Rises”, which looks at a range of alleged Labour policies and estimates how much these would cost.
Some of these estimates come from Opposition Policy Costings compiled by HM Treasury.
But others – including the biggest single item, around £20bn for Labour’s green plan which Keir Starmer’s party calculated itself – do not.
Indeed, earlier this week, the Treasury’s most senior civil servant James Bowler stressed in a letter to a Labour shadow minister: “the £38bn figure used in the Conservative Party’s publication [Labour’s Tax Rises] includes costs beyond those provided by the Civil Service”.
Civil servants “were not involved” in “the calculation of the total figure used”, he said.
Having civil servants work out the cost of opposition policies is nothing new. But it can be controversial because the calculations are based on assumptions provided by the government’s political advisors (i.e. the opposition party’s political rivals). As we’ll see, the assumptions those advisors choose to make can have a big impact on the resulting figures.
Does the £38bn figure make sense?
A lot hinges on whether the £38bn figure is reliable. And we have reason to doubt at least £12.2bn of this total.
‘Misleading’ use of research on insourcing, says author
Of that £38bn, the Conservatives say £6.5bn is the cost of “insourcing”. That’s Labour’s plan to bring some services that are currently outsourced to the private sector back under direct public control.
The figure comes from Treasury modelling that uses an assumption about the inefficiency of insourcing provided to officials by the government’s political advisors. That assumption is in turn based on a report by the Institute for Government (IfG).
But the IfG report’s author said after the leaders’ debate that using his team’s research to “partially justify” the £2,000 headline figure “is misleading” because the evidence is “limited” and “can’t be applied to all services”.
“We make this clear in our analysis,” he wrote, “but the Conservative party’s assumptions ignore this”.
And even if the IfG assumption was applicable here, there’s another problem with the £6.5bn figure.
The Conservatives have only used the most expensive of the five scenarios that officials considered. It assumes Labour will “insource” 50 per cent of government contracts – rather than 10 per cent, 5 per cent, 2 per cent or 1 per cent, as the Treasury also modelled.
Had the party chosen even the second most expensive option, it would have had to reduce the claimed “Labour tax bill” by £5.1bn.
Overestimating costs?
Another big item – Labour’s plan to “bring back the family doctor” – is based on one of several scenarios modelled by civil servants.
In one, officials said this could be rolled out for free. In another, which officials described as a “reasonable mid-point estimate”, it would cost £2.4bn.
But the Conservatives plumped for the most expensive scenario modelled: £3.8bn, adding £1.4bn to their total compared to that “reasonable mid-point”.
Similarly, the Conservatives opted to include a version of Labour’s plan for school breakfast clubs in which half of eligible families take up the offer. That makes up £4.5bn of the total.
But had they run with the Treasury’s alternative scenario – which assumed one-third take up – the figure would have been £1.8bn smaller.
It’s the same story with bus reform. The Conservatives have picked the upper estimate (£3.6bn) rather than the lower estimate (£1.7bn) officials produced.
By choosing the largest figures available for these three policies, the Conservatives have added a combined £5.1bn to their total – on top of the £5.1bn from doing the same with insourcing.
£2bn for Ukraine would also happen under the Conservatives
Part of the £38bn is £2bn over four years to support Ukraine. But as the Conservatives’ dossier explains, this is based on Labour’s policy to match what the government is already planning.
So we think it’s misleading to present this as a “Labour tax rise” as any tax hike it might incur would also take place under the Conservatives.
How many households?
So far, we’ve looked at the total figure the Conservatives have put on the cost of a Labour government.
But it’s also worth considering the bottom half of the fraction – the number of people this alleged cost would be spread between.
The Conservatives have opted for the number of families where at least one person is in work: 18 million.
But if we divide the total by all households, including pensioners and homes where no-one is currently employed, many more families, couples and single people would share the load: about 28 million.
Let’s assume that we suspend our concerns about the £38bn total. Across 28 million households, that would be £1,360 each, spread over four years. Somewhat lower than Rishi Sunak’s £2,000 figure for those in work.
And then there’s the question of whether we should even be looking at a per household cost. Keir Starmer told Channel 4 News this week that Labour has “no plan to increase taxes for working people”. And in the leaders’ debate, he said that his party would not raise income tax, national insurance nor, apart from on private schools, VAT.
So while economists sometimes express these totals as “per household” figures, we should remember that businesses could end up paying some of the cost of any Labour tax rises.
Can we get closer to the answer?
Labour disputes many of the figures in the Conservative party document – including on grounds we haven’t looked at here. And until the manifesto is out, any calculations or predictions are highly uncertain.
Assuming conservatively that the issues with the Conservatives’ £38bn figure are constrained to those we’ve looked at in this article, that would put the bill for Labour’s policies at £25.8bn (that’s £38bn minus the £12.2bn we’ve queried).
To use Rishi Sunak’s preferred group, that’s £1,433 spread over four years per “working family”. Spread across all UK households, the figure is £921 across four years.
And it’s important to stress: even our figure is based on assumptions about policies that may or may not make it into Labour’s manifesto. Only when that is published will we get a clearer sense of whether a Labour government would push up tax bills, by how much, and for whom.
A Conservative spokesperson told us: “Labour’s £2,094 tax rise figure was calculated fairly. This sober, credible analysis sets out clearly that Labour’s £38.5 billion in unfunded spending taxes would hike taxes for working people by £2,094.
“For example, in one line item we took £23.7 billion over 4 years using Labour’s own figures from their Green Prosperity Plan, instead of the upper estimate of £28 billion a year. 21 of the 27 costings are official opposition costings conducted by Treasury officials and published on their website; three are government figures; two are the Labour Party’s own costings and one is from a report by a publicly quoted investment bank.
“It is for Keir Starmer to explain which of the policies that were Labour policy last month are now no longer Labour policy.”
We contacted Labour for comment.
FactCheck verdict
Rishi Sunak claims Labour policies would cost “working families” £2,000. This is based on the Conservatives’ claim that the bill for the next parliament would be £38bn, which they’ve divided by the 18 million households in which at least one person works. That’s £2,094 per working household, spread across four years.
But we think the Conservatives have overestimated their £38bn figure by at least £10.2bn, by choosing the most expensive options of those available, rather than the second-most costly scenarios modelled. On top of this, they’ve chalked up £2bn for Ukraine as a “Labour tax rise” – even though this is government policy and would therefore also be a cost incurred under the Conservatives.
We’ve also got questions about the choice to divide the total between “working families”, rather than all 28 million UK households, which makes the per-household figure appear larger.
We cautiously estimate that a more reliable figure would be £921 per household spread across four years.
But the reality is that we can’t say if and by how much a Labour government would raise taxes – nor whether they would be paid by households, businesses, or both – until the party publishes its manifesto.
The Conservatives say their figure was “calculated fairly” as part of a “sober, credible analysis”.
(Photo by Jonathan Hordle/ITV/Shutterstock)