Labour Conference 2023: No tax rises for working people, Labour promise

Contents:
No tax rises for working people, Labour promise
‘Iron-Shadow Chancellor’ promises stability and crackdown on waste
Foreigners, firms and fund managers targeted for tax rises
Corporate taxes - Road map promised by ‘proudly pro-business’ Labour
Supporting start-ups and innovators
Business rates – alternative under construction
Personal taxes – might IHT reliefs face axe?
Labour promise to strengthen employment rights
Green economy – ambitious plans but seemingly little role for tax
Cracking down on evasion and avoidance
Other points of interest

No tax rises for working people, Labour promise

Growth not tax rises will pay for the improvements in public services a Labour Government would introduce, party leaders emphasised at the conference.

With taxes at a post-war high, the party is keen to reassure voters that an incoming Labour government would not increase taxes on working people, instead generating additional revenue through economic growth.

Ahead of the conference, in September, Labour leader Sir Keir Starmer had already told the Mirror that income tax would not increase, saying: “We will do nothing to increase the burden on working people, whether it comes to tax or anything else. They have paid a heavy price for the incompetence of the government after the last 13 years.”

Shadow Chancellor Rachel Reeves repeated this message in Liverpool, telling the conference: “I didn’t come into politics to raise taxes on working people. Indeed, I want them to be lower.” She said Labour would ‘tax fairly and spend wisely’, adding: “You cannot tax and spend your way to growth”.

In conversation with Lord (Jim) O’Neill at an event hosted by the Tony Blair Institute for Global Change, Reeves said that the party’s mission to deliver the highest sustained growth in the G7 group of nations was arguably the most important of the party’s five national missions, because growing the economy would increase living standards and generate money to invest in public services.

Asked what she might do with an ‘unexpected windfall’ as Chancellor, Reeves’ message discipline was unbroken, promising no unfunded spending commitments, committing to using taxation for day-to-day spending and pledging economic growth that would ‘increase tax receipts and give me more money to play with’.

Speaking at the CIOT’s fringe event with the Institute for Fiscal Studies, Shadow Financial Secretary to the Treasury James Murray said that economic growth was “front and centre” of the party’s plans for government and that the route out of the UK’s current economic situation was “not by pulling the tax and spend lever”. While he acknowledged that he would like to see “taxes on working people lower” he added that it would be done “on the basis of fiscal and economic responsibility”.

He continued: “It’s not by accident that the number one mission is to get the highest sustained growth of the G7. We see that growth as absolutely crucial to unlocking everything else.”

It is important to note that Labour does not appear to have promised not to increase the overall tax burden. Pressed to make this commitment by Sky News ahead of the conference, Starmer declined to give that assurance, but emphasised: "I want it [the tax burden] to come down for working people.”

One former local party chair CIOT spoke to characterised the leadership’s strategy on tax as ‘safety-first, minimising the amount of area the Tories have to fire at’.

‘Iron-Shadow Chancellor’ promises stability and crackdown on waste

Labour’s leadership is seen as more trusted than the Conservatives on the question of economic competence. The party is promising to tackle waste, strengthen the independence of the UK’s fiscal institutions and return to a single annual fiscal event.

Delegates and visitors to the conference left Liverpool more convinced than at any point in the last 13 years that the party is on the verge of its first General Election victory since 2005. That is in no short measure due to the party’s focus on economic reassurance and polling showing that Labour is now more trusted than the Conservatives on the economy and tax (among other issues).

Rachel Reeves used her conference speech to set out plans to deliver ‘iron clad fiscal rules’, proposing the creation of a new ‘Charter for Budget Responsibility’.

This so-called ‘fiscal lock’ would guarantee in law that future ‘significant and permanent tax and spending’ changes proposed by government would be subject to the independent scrutiny of the Office for Budget Responsibility. She told the conference: “Never again will we allow a repeat of the devastation Liz Truss and the Tory Party have inflicted on family finances. Never again will a Prime Minister or Chancellor be allowed to rush through plans that are uncosted, unscrutinised, and wholly detached from economic reality.”

There was a strong focus in Reeves’ speech on tackling government waste. She promised Labour would ‘wage a war against fraud, waste and inefficiency’. She announced what she called ‘three further fronts in Labour’s war on waste’. These were:

• Enforcing the ministerial code on the use of private planes
• Aiming to halve government consultancy spending, with new rules requiring departments wanting to bring in consultants to demonstrate the value for money case
• Going after fraud in covid economic support schemes (a ‘carnival of waste’) with the appointment of a Covid Corruption Commissioner supported by “a hit squad of investigators, equipped with the powers they need and the mandate to do whatever it takes to chase down those who have ripped off the taxpayer, take them to court, and claw back every penny of taxpayer’s money that they can.” 

The Shadow Chancellor’s plans won the endorsement of the former governor of the Bank of England, Mark Carney, who signalled his support in a video message played to delegates in the conference hall.

The Charter for Budget Responsibility was first proposed by Rachel Reeves in an article published in the Financial Times ahead of the conference. In the article she also proposes to return to a single annual Budget fixed in the autumn, with a spring update in early March featuring updated forecasts and minor policy changes. As the FT notes, this is what was recommended by the 2017 “Better Budgets” report, published by CIOT, the Institute for Fiscal Studies and the Institute for Government.

Foreigners, firms and fund managers targeted for tax rises

While Labour is not proposing broad tax increases they do have a number of carefully targeted tax changes designed to raise more money for the party’s priorities.

Three of these were re-confirmed by Rachel Reeves in her keynote speech:

• Levying “a proper windfall tax on the huge profits the energy giants are making”
• “Abolish the non-dom tax status and put that money into our national health service” 
• Ending “the tax loophole which exempts private schools from VAT and business rates and [putting] that money into helping the 93% of children in our state schools”

Reeves told delegates the last of these would be done in her first Budget as Chancellor.

Reeves also confirmed a new policy of raising the stamp duty land tax surcharge on overseas buyers. This would be used to pay for additional planning officers to help speed up planning decisions as part of the party’s plans to transform the planning system and build 1.5 million homes over the next Parliament. This would also include a generation of ‘new towns’ and devolving greater housing and planning powers to elected Mayors. The surcharge is currently two per cent. It is not clear what it will rise to.

At the conference Labour delegates agreed a 116 page paper from the party’s National Policy Forum (not published, but summarised here) which, as well as the three re-confirmed policies listed above, includes the following tax proposals / statements:

• Make sure that multinational tech companies pay their ‘fair share’ of tax
• Support implementation of the OECD global minimum rate of corporate taxation and back an international agreement on the fairer taxation of large multinationals including the global tech giants
• Replace the current system of business rates in England and Wales
• End tax breaks for private equity bosses
• Crack down on tax evasion, tax avoidance, and the use of offshore tax havens, ensuring people and businesses can no longer avoid paying their fair share

See later sections of the report for more on all of these.

Unlike some motions passed at the conference the Policy Forum’s paper has the backing of the party leadership. The ‘Labour List’ website describes it as “the most up-to-date and comprehensive statement yet of Labour’s current policy stances”. A ‘party source’ told the website that the document contains no new commitments that increase spending or raise tax beyond what has already been set out by the shadow cabinet.

Anneliese Dodds, the former shadow tax minister who chairs the Forum, and sits in Keir Starmer’s shadow cabinet, described it as “the culmination of three and a half years of hard work: 28 formal policy consultations; over 5,000 written responses; policy seminars with hundreds of party members; three annual reports to Conference; and our Stronger Together policy review”. 

Is the paper a draft manifesto? Up to a point. Dodds says it will “form the basis for the manifesto we agree… when the next election is called.” But the manifesto is unlikely to be 116 pages long so some of the proposals will not make the cut. However the tax measures stand more chance than most of inclusion given they are designed to fund priorities elsewhere. Of course the next election is probably a year away so it is possible that changes to government policy in the meantime – as well as new Labour ideas such as the SDLT surcharge increase – lead to further changes.

One final observation in this section. The ’i’ reported during the conference that “Labour has ruled out announcing any more tax rises before the next general election”. Citing a ‘senior party source’ the paper claimed that Keir Starmer and Rachel Reeves “have said privately that they will not put any further tax rises [beyond those already announced] in their general election manifesto”. Statements such as this should be treated with caution. It seems quite plausible that this is the leadership’s intention and what has been communicated to shadow ministers to prevent ideas for further tax rises being presented. However, a probable year out from an election, there is plenty of opportunity for events or political expediency to intervene. In particular Labour would not necessarily accept any tax cut announced by the Government in the Autumn Statement or Spring Budget.

Corporate taxes - Road map promised by ‘proudly pro-business’ Labour

A Labour Government would publish a new business taxes road map. The party backs OECD-led reforms but would otherwise leave corporate taxes mostly untouched.

An appeal to business was at the heart of Labour’s conference strategy, though the party’s offer is based more around stability and coherent strategy than it is around tax policy changes. On the fringe, Shadow Chancellor Rachel Reeves emphasised that Labour was both a ‘proudly pro-business party’ and a ‘proud workers’ party’, emphasising the need to deliver economic growth ‘from the bottom up and the middle out’.

Party officials were buoyed by polling of business leaders that found, when asked who is “best for business”, 45 per cent choose a future Labour government led by Keir Starmer, compared to just 32 per cent who opt for the Conservatives.

Shadow Financial Secretary James Murray told the CIOT/IFS fringe event that a Labour Government would publish a new ‘business tax road map’ setting out policies for the whole of the Parliament in order to give businesses ‘certainty and stability”. Murray promised Labour would develop its policies in tandem with business.

At the 2019 election Labour – under Jeremy Corbyn – proposed to increase corporation tax to 26 per cent, with a lower 21 per cent rate for small profits. The Conservatives – under Boris Johnson – said they would keep it at 19 per cent. The Sunak administration’s adoption of something close to the Labour position has more or less nullified this one-time dividing line as a point of contention between the parties (though any Conservative manifesto commitment to cut corporation tax would present Labour with a dilemma).

As noted above, Labour does of course have a few changes to corporate taxation the party is committed to. Notwithstanding the government’s decision last autumn to increase the energy profits levy to 35 per cent (and extend it until March 2028) Labour have said the rate should increase by a further three per cent and, more significantly, that the ‘loophole’ which allows companies to reduce their liability if they invest in British energy projects (ie the investment allowance) should be closed. The party has also talked about backdating the expanded levy to the start of 2022 though the further we get from this date the harsher a retrospective tax bill of this kind will look.

The party is also explicitly supportive of the OECD Inclusive Framework project, backing a global minimum rate of corporate taxation (and arguing it should have been higher) and also wanting ‘international agreement on the fairer taxation of large multinationals including the global tech giants’ which can be taken to mean Pillar One.

It is interesting that the National Policy Forum also includes carries the need for multinational tech companies to ‘pay their fair share of tax’ as a separate bullet point. If this is not a duplicative reference to the OECD process it may be a reference to reform of business rates (see below) or a holdover from the former policy (adopted in 2021, dropped earlier this year) of increasing the digital services tax from two per cent to twelve per cent to fund temporary business rates cuts. Or it may refer to all three.

James Murray told a fringe meeting he welcomed the OECD proposals, but stressed that they had to be fair to UK businesses. At the same event Treasury Committee member Dame Angela Eagle accused multinational companies of eroding the tax base through tax planning and welcomed the steps being taken to establish a global minimum tax.

Finally, Labour opposed the reduction of the bank surcharge (from eight per cent to three per cent) – which accompanied this year’s increase in the main rate of corporation tax – when it was being legislated, but confirmed back in December 2022 that they would not put it back up, or introduce a financial services windfall tax.

Supporting start-ups and innovators

Labour want to encourage business investment and innovation, but their focus seems to be on improving existing tax incentives rather than designing something new.

In March Rachel Reeves announced that Labour would review the UK business tax regime as part of efforts to make Britain the fastest-growing economy in the G7. It is unclear what form this review is taking but it could mean that policy in this area will develop ahead of next year’s election. Shadow Skills Minister Seema Malhotra, speaking on the conference fringe, said that the review would include the party’s plans to reform business rates (see below).

According to Bloomberg, the party briefed at the time that they would consider changes to capital allowances but would not cut corporation tax. Within days the Conservative Government announced the introduction of a generous regime of full expensing for companies investing in plant and machinery from April 2023 until March 2026. Labour has criticised the temporary nature of this measure but not so far committed to making it permanent.

Bloomberg also reported back in March that Labour would seek ways to encourage more re-investment of profits by companies rather than buying back shares or making dividend payments. A briefing by Macfarlanes ahead of the conference noted the one per cent tax on share buybacks introduced in the US at the beginning of this year and a report in 2022 from left-leaning think tanks IPPR and Common Wealth calling for a similar tax to be introduced in the UK.

Labour have mostly been quiet on research and development tax credits. A paper published by the party in December 2022 recommended that they “maintain and build on the R&D tax credit system” including looking “at whether there are ways to make the process less burdensome for firms, balancing that with the need to tackle fraud”. Reeves said in a Foreword to the paper that the ideas in the paper would inform the development of Labour’s next manifesto.

The issue was put on the conference agenda at a fringe meeting held by Centre for Cities and sponsored by ForrestBrown – a specialist tax credit consultancy. In the discussion, ForrestBrown’s Jenny Tragner said the R&D system was a in a huge amount of flux. She said that she would like to see HMRC get better at how it communicates with business, suggesting that the R&D regime as a whole needed to be clearer and more easily navigated. From the audience CIOT’s George Crozier drew attention to ongoing problems around R&D compliance which are deterring some companies from claiming the credits. Tragner agreed these problems were widespread. She said HMRC should not be in charge of what is and is not R&D.

Speaking at the same event, Shadow Exchequer Secretary Tan Dhesi did not address R&D credits directly but raised wider concerns about the UK falling behind nations like the USA, France and Germany in the amount of money it spends on innovation and development. He said there was ‘a huge gap to fill’.

The December 2022 paper referred to above also contains wider policies to ‘make Britain the best place to start and grow a business’. These include a number of measures to ‘unlock institutional investment’ and ‘transform the British Business Bank’, to ‘translate university research into economic growth’ and ‘make public procurement work for start-ups’. On the tax front, apart from R&D, the paper encourages Labour to:

• Commit to maintaining the SEIS (Seed Enterprise Investment Scheme), EIS (Enterprise Investment Scheme) and VCTs (Venture Capital Trusts), saying there is strong evidence as to the benefits of the schemes in stimulating investment and entrepreneurship
• Review whether the scope and scale of EIS and SEIS are sufficient (eg whether there are important innovative sectors excluded by the current rules)
• Modernise the business rates system (see below)

Business rates – alternative under construction

An incoming Labour government is committed to ending the current business rates regime, but what the party’s alternative will look like remains largely unclear.

The abolition of business rates was first mooted by the Shadow Chancellor in her speech to last year’s Labour conference. A little over 12 months on and we still don’t know the specifics of what its replacement will look like or how it will work in practice.

The National Policy Forum paper promises Labour would: “Scrap and replace the current system of business rates in England and Wales with a fully costed and funded system of business property taxation”.

In her Make UK speech in March Rachel Reeves said the new system would:

• ease the tax burden on bricks and mortar businesses
• always incentivise investment – especially in those areas that contribute towards decarbonising our economy
• reduce uncertainty – with frequent revaluations and instant reductions in bills when property values fall
• reward, rather than punish, entrepreneurs – with incentives for businesses to move into empty premises

Speaking at CIOT’s fringe event in Liverpool, Shadow Financial Secretary James Murray said that the replacement would be a “better system for the 21^st century” that would support the high street and ensure multinational businesses “pay their fair share”.  This was backed up by comments from Baroness Taylor of Stevenage – a communities spokesperson for the party – who told an event hosted by the think tank Localis that the measures would help level the playing field between online and bricks and mortar businesses.’

Back in 2019 Labour said they would ‘review the option of a land value tax on commercial landlords’ as an alternative to business rates. We haven’t heard any specific further speculation on this front but given that such a levy could be consistent with Reeves’ criteria above it cannot be ruled out. (For detail of what such a levy might look like see the proposal for a Commercial Landowner Levy, backed by the Liberal Democrats.)

There were warnings on the fringe both of the risks of abolishing business rates and of more immediate problems in this area.

Speaking at Localis’ event Vivienne King of the Shopkeepers’ Campaign (a group established to campaign against high business rates) warned that wholesale replacement could create ‘a new set of problems’. She said the current system was ‘incomprehensible’ and accused civil servants of being ‘detached from the distress’ faced by shopkeepers in the face of a system that did not reflect business performance. King argued in favour of a reformed rates system that was ‘pro-growth’, with ‘hardheaded, sensible tax reliefs’.

Emma McClarkin, of the British Beer and Pub Association, said the government had switched off from the challenge of business rate reform and warned that the end of reliefs for the pub trade from next April threatened the existence of many in the sector. At a separate event Martin McTague of the Federation of Small Businesses called on government to double small business rate relief to support businesses struggling with the cost of living.

Personal taxes – might IHT reliefs face axe?

We could see an election battle between a Conservative Party proposing scrapping inheritance tax and a Labour Party wanting to widen it. Labour remain committed to removing the tax benefits of ‘non-dom’ status and taxing ‘carried interest’ as income.

Labour had already ruled out increasing income tax rates ahead of the conference (see top section of this report) so attention is focused on smaller taxes and more targeted personal tax measures.

Two separate media reports ahead of the conference raised the profile of inheritance tax (IHT). One suggested that the Conservatives might be considering an eye-catching plan to phase out IHT, while the other reported that Labour were considering scrapping the tax’s business and agricultural property reliefs.

Labour spokespeople were, on the whole, not keen to get into the detail of what might or might not happen. James Murray told a fringe meeting that Labour has no plans to look at IHT. He hinted that the Conservatives were using the levy to create a political distraction, and accused them of not knowing what they want to do with the tax. Rachel Reeves had said ahead of the conference: "I don't have any plans to change inheritance tax", and that getting rid of it would be "the wrong thing to do".

The story about business and agricultural reliefs appeared in The Times as part of a broader story about reliefs the party had identified which could collectively contribute more than £4 billion of additional revenue. “Rachel’s team has built up a war chest of money that can be found by closing down some of the existing loopholes in the tax system that overwhelmingly benefit just a tiny number of people,” a ‘senior Labour source’ is quoted as saying. The suggestion is that this would be announced closer to the election.

While The Times refers bluntly to “ending business relief” the wording of the article in relation to agricultural relief refers to “closing exemptions that allow the super-rich to protect their wealth when they die by investing in assets such as farmland”, leaving it unclear whether all agricultural property relief is under threat or whether Labour are only considering narrowing the eligibility criteria.

The other relief identified in the Times article is scrapping or reducing business asset disposal relief (formerly entrepreneurs’ relief), the relief which enables company owners to pay a lower rate of capital gains tax (CGT) on their gains when they sell up. Shadow ministers were similarly tight-lipped about this suggestion during the conference.

More broadly Labour have all but ruled out any substantial rise in CGT rates. Rachel Reeves told a fringe audience that ‘preferential tax treatment’ for wealth generators was an important element in growing the economy. She said she had ‘no plans’ to look at the equalisation of income tax and CGT, arguing that a ‘wholesale equalisation’ could hurt investment in the UK.

Reeves and her colleagues were even clearer that Labour would not be pursuing a wealth tax. This had been ruled out ahead of the conference, in an interview with the Sunday Telegraph in August, when Reeves, asked about the prospect of any form of wealth tax, said: “We won’t be doing that.”  Her Treasury team colleague James Murray, speaking at a conference fringe event hosted by the New Statesman, said that a Labour government’s focus would be on raising household incomes, going for growth and winning the trust of business. He said a wealth tax would not support these aims.

However, there are some within the party who think that the party should be offering bolder change. At a Resolution Foundation event, Greater Manchester Mayor Andy Burnham said an incoming Labour government should think again about council tax revaluation and start a debate on the merits of a Land Value Tax. He said this could be part of a wider strategy aimed at rebalancing the tax system away from income and towards wealth, a view shared by many across the four days of conference. Paul Nowak, general secretary of the TUC, called for a debate on how we tax wealth rather than work, and promised to keep ‘banging the drum’ on this issue.

One change being promised which will please the left of the party is to target private equity fund managers by treating carried interest as earned income rather than as a capital gain (so presumably raising the headline rate from 28 per cent to 47 per cent, once you include national insurance). This has been repeated by Rachel Reeves as recently as July and appears in the National Policy Forum paper but did not feature directly in the remarks of shadow ministers during the conference.

Similarly crowd-pleasing is the proposal to remove the tax benefits of ‘non-doms’, which did feature in both Reeves’ and Keir Starmer’s speeches. The Labour leader proclaimed: “The non-dom tax status is a legal loophole that allows some of the richest people in the world to avoid paying tax in Britain. That’s money we could invest in our NHS”.

Not in the speeches but in the National Policy Forum paper is a reassurance that Labour would put in place ‘a system for genuinely temporary residents’. It is also worth noting the language: the party is not proposing to abolish non-domiciled status, only to remove the tax advantages which come with it.

Finally, Labour’s promise to reverse the abolition of the pension lifetime allowance was not mentioned (so far as we are aware) at the conference and must now be regarded as uncertain. The party opposed the abolition during the passage of the Finance Act which passed this summer, saying they would replace it with a targeted solution to the problem of retaining senior clinicians within the NHS. The policy was cited by Deputy Leader Angela Rayner in April as one of the taxes on the wealthy which her party would increase. But cancelling the policy before it is legislated is one thing, reintroducing the lifetime allowance after it has been removed quite another. There would be logistical complications (see analysis here) and tricky questions to be answered (see here) before Labour could do this. It might be that they would ultimately decide either not to bother – or alternatively that if they are looking at this area they might as well consider more fundamental changes to the pension tax relief regime.

Labour promise to strengthen employment rights

Legislation to strengthen workers’ rights is expected in the first days of a Labour government, but the plans have drawn criticism from both the left and right of the movement.

Legislation to improve workers’ rights would be an early priority for a Labour government, with the party’s ‘New Deal for Working People’ green paper setting out a series of proposals aimed at strengthening rights and growing the economy.

Labour’s deputy leader Angela Rayner told delegates that she would ‘personally table the legislation’ within 100 days of taking office, arguing that the measures would “boost wages, make work more secure and support working people to thrive”.

There had been concerns that the party had ‘watered down’ its plans when it was reported that a commitment to create a single ‘worker’ status in employment law had become a pledge only to consult on the plans. Rayner assured delegates of the party’s commitment to the plans, telling them that the measures would be delivered “hand in hand with the trade union movement”. In an effort to hold the leadership’s feet to the fire, the conference agreed a resolution affirming the party’s commitment to implementing the New Deal “in full” and by the end of the first term of a Labour government.

Speaking at an event on the gig economy hosted by the government relations consultancy Arden Strategies shadow work and pensions secretary Liz Kendall confirmed that Labour would consult in government on the single ‘worker’ status plans. Kendall also said that an incoming Labour government wanted to look at how the Department for Work and Pensions can help people ‘on’ as well as ‘into’ work and acknowledged that the flexibility offered by work in the gig economy was an attractive proposition to many.

Think tank the Fabian Society believes that the self employed hold the keys to Number 10, with a pamphlet produced this summer estimating that up to million self-employed people living in marginal constituencies could tip the election one way or the other. The proposals have the backing of the Mayor of Greater Manchester, Andy Burnham, however he said that he thought the plans could go further.

At an event on ‘good work’, Burnham challenged the party’s shadow cabinet to adopt some of the measures included in the ‘Greater Manchester Good Employment Charter’, a voluntary initiative that allows employers to demonstrate their commitment to fair working practices.

However, the party’s proposals for enhancing workers’ rights have attracted warnings from both the left and right of the Labour movement. Sharon Graham, the general secretary of the Unite trade union, used a pre-conference interview with the Observer to say that Labour needed to develop a ‘bolder’ policy platform. But her comments were shot down by party grandee Lord Mandelson, who urged caution on improving workers’ rights. Mandelson told a corporate gathering in Liverpool that his party needed to address ‘party political legislation’ on workers’ rights introduced by the Conservatives, but that he did not want business to ‘get the wrong idea’ that the party would abandon the flexibilities in the modern workforce brought about by technological change. He said: “We need trade unions but we need trade unions of the 21st century not the last one.”

The general secretary of the GMB union, Gary Smith, acknowledged the balance to be struck between workers’ rights and labour market flexibility, telling the Arden event that many of his members appreciated the flexibilities of the gig economy but that government needed to ‘level the playing field’ so that unscrupulous businesses were unable to exploit workers and undercut good businesses. He told delegates: ‘change is coming and employers should work with us’.

Green economy – ambitious plans but seemingly little role for tax

Labour senses opportunities following the Prime Minister’s decision to row back on the government’s Net Zero commitments, but is wary of increasing taxes.

Shadow Chancellor Rachel Reeves said on the fringe that unlocking green jobs and supporting green industries could power a new industrial revolution across the nations and regions of the UK. That includes plans for a publicly owned ‘Great British Energy’ company - a new home-grown, publicly-owned national champion in clean power generation - which Sir Keir Starmer said would be based in Scotland, ‘at the heart of a Britain built to last’.

Reeves said that shadow ministers were looking towards the United States for inspiration, where the Inflation Reduction Act has galvanised and encouraged investment. She described the UK as the ‘sick man of Europe’ in building infrastructure projects and accused the Conservatives of presiding over drift and inaction, warning that Britain could lose out on investment, research and development opportunities if it did not harness green energy opportunities.

Shadow Treasury Minister Tan Dhesi sensed that Labour had the upper hand with the green policy agenda. He told an event hosted by the Institute for Public Policy Research that a ‘green’ Treasury needed to be staffed by ministers who believe in the net zero agenda. He accused the Conservatives of regressing from the ‘hug a husky’ era of David Cameron. He rejected the suggestion that Labour were ‘eco-zealots’, telling his audience, “We need to take the (climate) challenge and embrace it as an opportunity” to create jobs and bring down the cost of living.

Dhesi was asked by CIOT during a Labour Business event how the tax system could be used to discourage businesses from engaging in environmentally unfriendly practices. He said shadow ministers had still ‘not cemented’ their policies in this area but indicated that they were looking at how to overcome NIMBY concerns over onshore wind farms and other developments by enabling local residents in areas affected to gain some of the benefits in the form of lower energy bills.

Some on the fringes of conference argued that Labour should be thinking about how it taxes users of green vehicles. IFS Director Paul Johnson pointed out at the CIOT/IFS fringe event that the next government will soon have to ‘grasp the nettle’ of replacing fuel duty and he expects the UK will eventually have to move to road pricing, but he added: “I don’t expect any party to put it in their manifesto!”. He was supported by CIOT Director of Public Policy Ellen Milner, who argued that any future government should be “proactive” on motoring taxes. Similar comments were made at a separate event by Professor Wendy Carlin of University College London, who said the green transition would require the development of better infrastructure to support the rise in electric vehicles.

There were no specifically ‘green tax’ measures in the National Policy Forum paper adopted at the conference, though it did include other ‘green economy’ proposals including:

• Ramp up public capital investment into the green economy to £28bn a year in the second half of the parliament at the latest
• Create a National Wealth Fund that will invest alongside the private sector in gigafactories, clean steel plants, renewable-ready ports, green hydrogen and carbon capture 
• Set out a clear roadmap for decarbonisation so businesses and workers can plan ahead
• More than double onshore wind capacity, triple solar capacity and quadruple offshore wind capacity, while also setting ambitious targets on delivering hydrogen and nuclear power

As this suggests, while Labour is ambitious on climate change, the party is currently cautious about any tax commitments – even environmentally-driven ones – which might enable the Conservatives to accuse them of adding to the cost of living for households or hindering the growth of businesses. The loss of the Uxbridge and South Ruislip by-election contest, which the Conservatives fought on a platform of opposition to the expansion of the London Ultra Low Emissions Zone (ULEZ), was cited by a number of party members as a justification for this caution.

However this may be an area they look at in government. In particular it has been reported that, like the current government, they are considering a carbon border tax on goods coming from countries with less stringent emissions rules than the UK. “This is something that is being looked at by the EU and it is clearly something we need to examine too,” a ‘Labour figure’ told The Times ahead of the conference.  However, they added this was “more likely to be an issue for government” rather than the election manifesto.

Cracking down on evasion and avoidance

Labour want to ‘crack down’ on tax evasion and avoidance, but have so far not set out any particular proposals for doing so, unless you count the ‘loopholes’ listed elsewhere in this report as avoidance.

As noted above the conference adopted a paper from the party’s National Policy Forum which promises to: “Crack down on tax evasion, tax avoidance, and the use of offshore tax havens, ensuring people and businesses can no longer avoid paying their fair share”.

The party has not indicated which policies they will implement to deliver this objective but there are a number of places we can look to get an idea.

In particular, at the 2019 election Labour published a 35 point ‘Fair Tax Programme’ which they said would raise more than £6 billion a year. This included a section on ‘Stronger Law, Enforcement and Support for HMRC on Tax Avoidance and Evasion’ which, while the Labour Party has come a long way since 2019, contains a number of measures which may conceivably appeal to the current party leadership. These include:

• A General Anti-Avoidance Rule (wider-reaching than the General Anti-Abuse Rule)
• Strengthening the law on failing to prevent the facilitation of tax evasion, and consulting on extending the Suspicious Activity Regime to tax avoidance
• ‘Properly resourcing HMRC’ (including setting up a taskforce including past and present HMRC staff and tax practitioners, among others, to make recommendations)
• Increasing the number of targeted audits done by HMRC
• Extending the time limit for HMRC corporation tax investigations of offshore transactions
• Fully restoring HMRC’s preferred creditor status

The 2019 proposals also promised ‘No public contracts for tax dodgers’. This is an area where there appears to be continued interest from Labour. Recent analysis by Macfarlanes observes that “one policy that appears to be gaining traction within the Labour Party is making the tender for public contracts contingent on companies demonstrating good tax practices”. A National Procurement Plan published by the party a year ago included a proposal to “Reward businesses and enterprises who pay their taxes and their workers properly”.

The party may also see of its existing policies as targeted at avoidance, albeit using a broader definition of the term than HMRC’s. For example, removing the tax advantages of non-dom status, taxing carried interest as income and implementing the OECD-led international reforms.

A number of speakers on the fringe touched on some of the issues around tax compliance.

At the CIOT/IFS fringe meeting CIOT’s Ellen Milner said that the error and carelessness elements of the tax gap could be reduced by making the tax system simpler, as well as by effective use of digitalisation and improvements to HMRC’s customer service levels.

Speaking at a New Statesman event on tax reform, Treasury Select Committee member Dame Angela Eagle called for tougher action on tax havens and stronger enforcement of tax law.

At a fringe meeting on ‘Kleptocrats and Oligarchs: Ending the UK's Dirty Money Problem’ Dame Margaret Hodge, chair of the All-Party Parliamentary Group for Anti-Corruption and Responsible Tax, said a future Labour government had to make tackling dirty money a high priority issue. Hodge, who was one of a cross-party group of MPs instrumental in strengthening the Economic Crime and Corporate Transparency Bill currently going through Parliament, said tougher laws were no good without having effective enforcement, and called for the National Crime Agency to be strengthened and funded properly to be able to do this.

Not tax-specific, but in his keynote speech to the conference, Shadow Foreign Secretary David Lammy said whistleblowers who expose stolen assets and sanctions breaches would be rewarded under a future Labour government. The shadow foreign secretary said Labour wants to make the UK the “anti-corruption capital of the world”.

Other points of interest

Tax and private schools

Shadow Chancellor Rachel Reeves defended Labour’s plan to introduce VAT (and business rates) on private school fees. At a fringe event she said the plans had been costed by the Institute for Fiscal Studies, who concluded that even with behavioural changes, the policy was still capable of raising revenues. Her commitment that this money would be used to invest in the state school system and the creation of mental health hubs in English secondary schools drew an enthusiastic response from the audience. The party has clarified ahead of the conference that it is not proposing to remove charitable status from private schools, only to remove their exemption from VAT and business rates.

Apprenticeship levy

The Apprenticeship Levy was the focus of a Policy Exchange debate with the former Home Secretary David Blunkett and Steve Rotheram, Mayor of the Liverpool City Region. Policy Exchange has published a paper proposing to turn the levy into an Apprenticeships and Skills Levy to better support the training of high quality, employer-valued skills, including on shorter and more flexible courses. Blunkett has chaired a Labour advisory group that has made similar recommendations. Unsurprisingly, there were little in the way of dissenting voices to the proposals, which come amid a backdrop of falling numbers of apprenticeship places and high levels of drop-outs. The National Policy Forum report confirms the party would reform the levy into a ‘Growth and Skills Levy’. Labour has said that under the new system companies will have the freedom to use up to 50% of their total levy contributions on non-apprenticeship training, while SMEs who do not currently pay the apprenticeships levy will continue to receive 95% co-payments

Financial regulation

Shadow Economic Secretary Tulip Siddiq said that an incoming government would look to provide regulatory stability, telling an event on financial and professional services that there were no plans to ‘rip up’ existing regulatory frameworks. However she identified four areas where action might be needed: inadequate crypto regulation, tackling fraud and financial inclusion (which Labour want the FCA to look at). They would seek to improve the ‘botched’ Brexit deal, including negotiating for mutual recognition of financial qualifications. Siddiq said she was conducting a review of financial services and invited people to feed in.

Financial education

Miles Celic, the chief executive of TheCityUK, a body representing UK-based financial and related professional services, said financial education is on the national curriculum but is not being taught properly. There are dozens of projects with individual schools but it needs to be built up and coordinated. US states with financial education on the curriculum show an uptick in saving, he claimed.