Labour launched its election manifesto yesterday ruling out increases in income tax and national insurance, and pledging that it would ensure greater pay equality, reinvigorate the labour market and review pensions policy.
Keir Starmer, Labour leader, said: “I make no apologies for being careful with working peoples’ money, and no apologies for ruling out tax rises on working people.
“I don’t believe it’s fair to raise taxes on working people when they’re already paying this much, particularly in a cost-of-living crisis. We will not raise income tax. We will not raise national insurance. We will not raise VAT. That is a manifesto commitment.”
Pay equality
Further pledges included the enactment of the socio-economic duty in the Equality Act 2010 to ensure that “whatever your background, you can thrive”. Women’s equality was highlighted as a key mission for the party with its plan to ‘Make Work Pay’ designed to transform the lives of working women. It includes strengthening rights to equal pay and protections from maternity and menopause discrimination and sexual harassment.
Labour promised to work to reduce the gender pay gap and to introduce a Race Equality Act, to enshrine in law the right to equal pay for Black, Asian, and other ethnic minority people, while also strengthening protections against discrimination.
The party also plans to introduce disability and ethnicity pay gap reporting for large employers.
Improve pensions outcomes
Charles Cotton, senior policy and practice adviser on pay and reward at the CIPD, said: “Obviously, we’re happy to see the commitment to undertake a review of the pensions landscape to consider what further steps are needed to improve pension outcomes, particularly given Monday’s joint letter calling on all the parties to commit to reviewing pensions adequacy.
“In terms of building on gender pay gap reporting with the introduction of disability and ethnicity pay gap reporting for large employers, this reflects one of our key calls to the main parties in advance of the election.
“If Labour was to form the next government, then we would look to respond to any consultations on these proposals and stress the importance of both pay and pension transparency in job adverts, as well as the critical importance of employers publishing pay narratives and action plans.
Minimum wage changes
Cotton highlighted Labour’s pledges to ensure the minimum wage is a genuine living wage and to change the remit of the independent Low Pay Commission so for the first time it accounts for the cost of living.
He also emphasised the party’s plans to remove the discriminatory age bands, so all adults are entitled to the same minimum wage, delivering a pay rise to hundreds of thousands of workers across the UK. Cotton said the CIPD would look forward to responding to these consultations if Labour forms the next government.
He stressed the important role the government has in being able to help employers improve workplace productivity, which will help to make future increases in the minimum wage more affordable for firms.
Pay transparency
Duncan Brown, independent adviser, principal associate at IES, and visiting professor at the University of Greenwich, said: “It’s good they have kept commitments on zero hours contracts, reforming employment status, gender and disability pay gap reporting and stronger labour market enforcement. I suspect the association with Europe and the EU pay transparency directive has made them cautious on that.
“But I am sure if they get elected that will be an important and possibly early area for Jonathan Reynolds [currently shadow business minister] to consider including salary history discussion bans and pay range publication. Angela Rayner should ensure that.”
Reforms carry risks
Responding to the manifesto launch, the Resolution Foundation said the proposals offered “the biggest shake-up of the workplace in a generation”, calling the aim of boosting the quality of work “laudable”.
It said that such major changes demand careful consultation and implementation and that the “boldness” contrasts with the party’s politically cautious approach to the public finances.
That means a future Labour Chancellor could be left implementing significant tax rises and public service cuts over the next parliament, the foundation said.
Mike Brewer, interim chief executive at the Resolution Foundation, said: “Labour’s manifesto proposes the biggest shake-up of the workplace in a generation. The aim of boosting the quality of work across Britain is laudable, as is a better deal for under-paid and under-valued care workers. But the sheer scale of these reforms carries risks that demand careful implementation. While Labour may want to start consulting over these reforms in their first 100 days in office, they’ll need to take their time to get their details and delivery right.
“This boldness in the workplace does not extend to the Treasury, where Labour have taken a politically cautious approach to tax and spend, with modest proposals on either side of the ledger. This approach sets the scene for a parliament of tax rises and spending cuts for unprotected departments. Even then, a modest dose of bad economic news could force a fresh round of tough fiscal choices if the debt rule is to be met.”
Support for care staff
The foundation emphasised that care staff are among the lowest-paid workers in Britain, and often at risk of being paid less than the legal minimum wage when travel time is included. It said there are “strong moral and practical reasons for a new Fair Pay Agreement in social care”, which it added is a sector “dogged by chronic staff shortages”.
It called on the next government to ensure all care workers are paid at least the real Living Wage (currently £12 an hour, and £13.15 in London, compared to the National Living Wage of £11.44), which it said would mean that more than two-in-five care workers would benefit directly.
The foundation welcomed Labour’s commitment to a child poverty strategy but said the absence of a comment on abolishing the two-child limit on welfare support was “noticeable”.
‘Trivial tax rises’
Paul Johnson, IFS director, said: “This was not a manifesto for those looking for big numbers. The public service spending increases promised in the ‘costings’ table are tiny, going on trivial.
“The tax rises, beyond the inevitable reduced tax avoidance, even more trivial. The biggest commitment, to the much vaunted ‘green prosperity plan’, comes in at no more than £5 billion a year, funded in part by borrowing and in part by ‘a windfall tax on the oil and gas giants’.”
He said that beyond that, the manifesto had “almost nothing in the way of definite promises on spending” despite Labour diagnosing deep-seated problems across child poverty, homelessness, higher education funding, adult social care, local government finances, pensions and more.
Johnson highlighted the party’s promises ‘not to do things’, such as “not to have debt rising at the end of the forecast. Not to increase tax on working people. Not to increase rates of income tax, national insurance, VAT or corporation tax”.
However, he said: “One public service where there are big promises is on the NHS. Labour has recommitted to the workforce plan, to getting rid of all waiting times more than 18 weeks, and to more hospitals. Big promises, but that will require big spending too.”
He said that this will leave Labour with a problem. “On current forecasts, and especially with an extra £17.5 billion borrowing over five years to fund the green prosperity plan, this leaves literally no room – within the fiscal rule that Labour has signed up to – for any more spending than planned by the current government. And those plans do involve cuts both to investment spending and to spending on unprotected public services. Yet Sir Keir Starmer effectively ruled out such cuts. How they will square the circle in government we do not know.”
