Conservative minister warns of large fiscal gap under Labour budget
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Kemi Badenoch said Labour's reckless spending plans could create a £49 billion shortfall, forcing households to pay about £1,700 more in tax by 2030-31.
Conservative business secretary Kemi Badenoch told the Telegraph that the Labour government’s budget proposals could leave the public finances with a £49 billion gap, exposing what critics see as yet another warning sign of Labour’s spend-now, pay-later approach. She said the shortfall would force an average household tax rise of roughly £1,700 per year by the 2030-31 fiscal year.
Badenoch criticised Chancellor John Healey for not providing a clear plan to meet the defence spending target of 3 percent of GDP, suggesting an £11 billion deficit in that area. She also highlighted the estimated costs of a National Care Service (£3.5-17 billion a year), a council-housing programme (£4 billion annually) and additional departmental spending of about £17 billion needed to avoid real-terms cuts.
The Office for Budget Responsibility noted that several Labour proposals lack final details, making precise cost estimates difficult. It said the fiscal impact of a National Care Service depends on its final design and could range between £3.5 billion and £17 billion each year.
The Institute for Fiscal Studies estimated that meeting defence, council-housing and other departmental pressures would require an extra £28 billion, including £11 billion for defence, £8 billion to offset higher inflation and £9 billion to prevent real-terms cuts.
Labour’s shadow chancellor, Andrew Griffith, responded that the country faces a fiscal challenge and warned against higher taxes and borrowing. A Treasury spokesperson called the Conservative analysis “fiction”, claiming that the budget complies with fiscal rules, fully funds defence plans and puts borrowing on a downward trajectory.