By Jessica Frank-Keyes
Last week, Labour officially announced the long-anticipated news they were ditching their commitment to investing £28bn a year in Britain’s green energy transition.
Leader Sir Keir Starmer and shadow chancellor Rachel Reeves had already walked it back over time, including saying the full amount would be reached by the end of the Parliament and be subject to the party’s fiscal rules.
But with the figure now definitively dropped, Starmer has come in for more than a bit of criticism for his propensity to change his mind. However, advocates of his approach praise the politician’s apparent ruthlessness in the pursuit of power.
City A.M. takes you through five other financial policies Starmer has expressed a change of heart on since taking over his party.
1. Income tax
When he ran for Labour leader in 2020, Starmer pledged his government would raise income tax for the top five per cent of earners.
But speaking to the BBC in 2023, he confirmed he had moved away from the policy, saying: “We’re in a different situation now. I think we have the highest tax burden since World War Two.”
Starmer also told the Telegraph he wanted to lower taxes and was “not looking to the lever of taxation”.
2. Digital services tax
Reeves announced plans to increase the digital services tax (DST) – a levy on big tech firms like Google, Amazon and Facebook – from two to 12 per cent, at party conference in 2021.
The party suggested it could fund a freeze in business rates in 2022-23.
But by 2023, Labour confirmed it had no plans to raise the DST, and insisted the hike was only ever proposed as a “temporary measure”, according to the Times.
3. Wealth tax
In September 2021, Rachel Reeves suggested Labour could look at increasing taxes on wealth, saying “people who get their income through wealth should have to pay more”.
She highlighted examples such as stocks and shares and buy-to-let properties. But by the summer of 2023, she had changed her mind, as per an interview with the Sunday Telegraph.
The shadow Chancellor confirmed Labour would not seek to bring in a mansion tax or to increase capital gains tax, saying: “We have no plans for a wealth tax.”
4. Private school charitable status
Also in 2021, Reeves said Labour would strip private schools of their charitable status, which would have ended VAT tax exemptions, and diverted the money into state schools.
“Here’s the truth: private schools are not charities,” she was reported as saying at the time.
But, as first reported by the i paper in September 2023, the party has since rowed back on its promise, but still insists it would remove the VAT tax exemption and that the charitable status description was used as a shorthand for the wider policy.
5. Bankers bonus cap
Finally, in another indication of Labour’s efforts to woo the City and big business, the party has now confirmed it would not reinstate the bankers bonus cap.
Rules were brought in by the EU in the wake of the 2008 financial crisis, and scrapped by then-Chancellor Kwasi Kwarteng in 2022 and kept in place by Rishi Sunak.
Shadow Treasury minister Darren Jones previously said the “decision tells you everything you need to know about the priorities of this out of touch Conservative government”.
Reeves has now said she has “no intention” of restoring it, and added, if elected into power, “I would want to be a champion of a successful and thriving financial services industry”.
