Labour will cut the deficit every year and balance the books – with a surplus on the current budget, and falling National Debt as a percentage of GDP, as soon as possible in the next Parliament. How fast we can go will depend on the state of the economy, including what happens to wages, growth, the Housing Benefit bill, and events around the world.
Decisive action to strengthen growth, increase productivity and get sustained rises in living standards is the only way to balance the books fairly in the next Parliament and safeguard vital public services. Labour’s calculations show that if, in the next Parliament, wages were to grow in line with their historic average, tax receipts would be £12 billion higher.
1. Labour will deliver the rising living standards and stronger growth needed to balance the books. So we will:-
- Increase the minimum wage to £8 an hour before 2020;
- Give tax breaks to firms who start paying the Living Wage;
- Ban exploitative zero-hour contracts, to ensure that workers who work regular hours get a regular contract;
- Introduce a compulsory Jobs Guarantee, paid for by a bank bonus tax, to provide a paid starter job for everyone young person unemployed for over a year, which they will have to take up or else lose their Benefits
- Cut Business Rates for small business properties;
- Establish a British Investment Bank, to boost lending for small and medium-sized businesses, to foster growth and thereby create jobs;
- Make work pay by expanding free childcare for working parents of 3 and 4 year olds;
- Introduce a lower 10p starting rate of Income Tax to help 24 million working people;
- Get at least 200,000 new homes built a year to relieve the UK housing crisis;
- Secure our country’s place in a reformed European Union and boost exports;
- Create an independent National Infrastructure Commission in order to stop long-term decisions being kicked into the long grass;
- Devolve £30 billion of economic power and funding to city and county regions
2. There will be sensible spending cuts in non-protected areas; for example, we will:-
(a) cut the Winter Fuel Allowance from the richest 5% of pensioners;
(b) cap Child Benefit increases at 1% for two years;
(c) have a “Zero-Based Budget Review” of every pound spent by government, to identify savings and to cut waste and inefficiencies – so we can safeguard vital public services upon which people and businesses depend. That Review will be completed in our first year in government, but we have already published 8 interim reports – with more to follow in the coming weeks – which identify savings including:
- £250m in the policing budget, including from scrapping elected Police & Crime Commissioners, and reforming police procurement through mandatory joint purchasing of equipment by police forces;
- £500m a year in the Communities & Local Government budget through shared services, back-office collaboration, and streamlining;
- over £70 million of annual savings in the courts’ budget, including co-locating County Courts and Magistrates’ Courts, and by scrapping the use of the 15 High Court judges’ lodgings;
- £230m saved by cutting back on the wasteful expenditure related to this government’s Free Schools and Academies programmes.
- A modest £60 million of efficiencies in the Defence budget by bringing down the numbers of the armed forces top brass to sensible levels, by better managing inventory, and by improving defence procurement.
3. We will also make fairer choices by:
- Reversing this government's £3 billion a year tax cut for the top 1% of earners who earn over £150,000 a year;
- Introducing a Mansion Tax on properties over £2 million