Campaign catchup: Tax evasions, party poopers, and a political chicken

<span>Labour Party leader Sir Keir Starmer and shadow chancellor, Rachel Reeves face questions from journalists during a visit to Morrisons in Swindon.</span><span>Photograph: Stefan Rousseau/PA</span>
Labour Party leader Sir Keir Starmer and shadow chancellor, Rachel Reeves face questions from journalists during a visit to Morrisons in Swindon.Photograph: Stefan Rousseau/PA

Good afternoon. As the likelihood of a Labour victory on 4 July has hardened, questions about their plans in government have intensified. And although the party has presented a very cautious manifesto – offering, in Keir Starmer’s deathless phrase to the FT (£) today, “ordinary hope” – and boasted that it is fully costed and funded, there are good reasons to think that this is not the full story.

Labour says it will not raise VAT, income tax, or national insurance – but the Institute for Fiscal Studies and others accuse it of participating in a “conspiracy of silence” with the Conservative party over the choices on tax and spending that lie ahead. You needn’t be persuaded by Rishi Sunak’s dubious £2,000 tax bombshell claim to understand that the campaign trail quotes may not tell the full story.

This afternoon, a new story by the Guardian’s Anna Isaac sheds further light on where the money might come from. More on that, and the Tories’ summer wake party, after the headlines.

What happened today

  1. Conservatives | Rishi Sunak has refused to say whether any more Conservative activists or candidates might be drawn into the Gambling Commission’s investigation into alleged suspicious betting on the date of the election. Sunak said there were “multiple investigations” underway but that they were confidential.

  2. Scotland | The SNP is being investigated by Holyrood authorities over potential misuse of MSPs’ expenses to fund campaigning for the general election. An anonymous complaint claims that stamps paid for on expenses were passed to Westminster election candidates to use for posting leaflets to voters.

  3. Reform | Ofcom denied a claim from Nigel Farage that it was “almost rigging this election in favour of the existing parties”. The Reform leader claimed that the regulator had “changed the broadcasting rules to try to squeeze us out”. Ofcom’s rules have not changed, it said today, reiterating that broadcasters must take into account “evidence of past and/or current electoral support”.

Analysis: Labour’s wealth of tax options

In her story this afternoon, Anna Isaac reports on a range of options said to be under consideration for an incoming Labour government: a set of wealth tax measures that would be used to fund investment in public services.

One possible measure, which she revealed two weeks ago, is an increase in capital gains tax. The key new details are about inheritance tax, with proposals under consideration including an end to a rule allowing full tax relief on farmed agricultural land. (At the moment, there are concerns that such land is being deliberately purchased to avoid tax, and driving up prices for farmers.) 100% tax relief on inherited companies and shares could also go. And sources said that changes are being considered to the rules which mean no inheritance tax is due on gifts if they are made by a person who lives for at least another seven years.

The CGT and inheritance tax measures could together raise an estimated £10bn. Labour says that it has not arrived at any final decisions over all this. But a senior source in the party says:

We are starting from ground zero with our public services and infrastructure. We have to show we are serious about borrowing and raising revenue from taxes if investors are going to walk in step with us. These measures are part of unlocking wealth and putting it to work.”

It has been pretty hard to pin down Labour’s position on tax in the last few weeks – but persistent attacks from the Tories have considerably narrowed the options on the table. The party’s manifesto finds about £8.6bn a year through politically painless measures on avoidance, non-doms, oil and gas companies, private schools, and private equity profits. But in attempting to neutralise those Tory attacks, Labour has also pledged that it will not raise income tax, national insurance, VAT, corporation tax or capital gains tax on primary residences.

They have also made a more blanket promise not to raise taxes on “working people” - which, after a fair amount of hand-waving, was defined by Starmer as “people who earn their living … who rely on our [public] services and don’t really have the ability to write a cheque when they get into trouble.” Since almost nobody has written a cheque in at least a decade, that was understood by some to mean “people who don’t have savings” – but then Starmer said that working people have savings too.

Whatever the precise definition, the working people saga is good evidence that the Tory attacks have succeeded in producing evasive or technical answers. Another is the question of updating council tax bands. These are an obvious potential target for an incoming Labour government since they are based on 1991 valuations, when the difference between the cheapest and most expensive homes was much smaller, and are therefore hopelessly outdated and regressive.

But under pressure earlier this week from the Tories after shadow health secretary Wes Streeting refused to deny changes could be made, shadow minister Jonathan Ashworth categorically ruled out an update. Then Starmer said he wouldn’t “write the budgets for the next five years”. Today, deputy leader Angela Rayner said that “our priority is not to do anything with the council tax banding at the moment”. Current status: maybe!

The best line here is probably the one about not writing future budgets today, which has the virtue of being actually quite plainly reasonable. But most of the time, shadow ministers find a formulation that sounds like something is being definitively ruled out while retaining technical wriggle room – which obviously sounds shifty, because it is.

There’s no evidence that any of this has moved the polls towards the Tories even slightly – and maybe that’s a tactical vindication. But the campaigning success comes at a governing cost. It drastically curtails Rachel Reeves’ freedom to operate - and it means that if some tax rises do come, Labour will not have a real mandate. In 2010, people swallowed austerity because George Osborne had been banging on about it for so long. It’s hard to believe that the same strategy couldn’t work for Labour when most of the taxes in question won’t affect the vast majority of people anyway.

But Labour won’t go down that path, even a tiny bit, fearing that it might risk the toppling of that fabled Ming vase. The result is that a party with a yawning poll lead hoping to succeed a government which most voters agree has wrecked public services is probably quite annoyed about a news story saying that they might increase a tax that affects the richest 4% of people to help fix it.

Well, less than two weeks to go. Have a great weekend.

What’s at stake

In the second instalment of The broken years, a series on the legacies of Conservative rule, Guardian architecture critic Oliver Wainwright examines the impact of one specific Tory policy on the housing market: help to buy.

As house-price inflation continues to rocket far beyond wages, Rishi Sunak’s proposal is to “resuscitate the still-warm corpse of help to buy, the single policy that the government’s housing strategy has relied on for the last decade,” he writes – but the evidence is that it has “only served to help the already well-off, increase house prices further, and pump public subsidies straight into the pockets of the party’s favourite donor house builders”. He goes on:

The policy provided first-time buyers with an equity loan of up to 20% of the value of a new-build property – or 40% in superheated London – capped at a total price of £600,000. The buyer was required to stump up a deposit of just 5%, with the remainder covered by a traditional mortgage ... The dubious logic behind help to buy was that by stimulating housing demand, housing supply would inevitably follow.

Economists balked. As Christian Hilber, professor of economic geography at the London School of Economics, wrote at the time: “Help to buy will likely have the effect of pushing up house prices (and rents) further with very little positive effect on new construction. Housing will likely become less – not more – affordable for young would-be-owners!”

Hilber and other critics were proved right – and the consequences are still being felt today:

Research conducted by Hilber and his team at the LSE found that help to buy increased house prices in London by 8%, and boosted developers’ revenues by 57% in the process. The researchers found the policy “led to higher new-build prices but had no discernible effect on construction volumes”, effects that are “arguably contrary to the policy’s objectives”. Worse still, they found that the policy actively stimulated construction “in the wrong areas”. It had the effect of catalysing out-of-town developments on greenfield sites, increasing commuting distances and car use, rather than helping to revive depressed town centres and stimulate development where employment and productivity is concentrated – where housing is needed most.

Winners of the day

Green candidates in Waveney Valley and North Hertfordshire, after polling commissioned by the party found them with leads in both Tory-held rural seats, Peter Walker reports. But there’s a note of caution, too: large numbers of voters in both constituencies are still undecided.

Losers of the day

Conservative candidates in Labour-held seats in the north, after they received an email advising them to take a “pragmatic approach” and focus on campaigning further south, according to the Daily Telegraph. The email said: “If you feel the need to pop up and shoot a couple of videos, great, but there is no pressure from me. Time is valuable and hours in a car isn’t gaining votes, thanks.”

Worst hangovers of the day

Anyone who attended the Conservatives’ summer party at the Hurlingham Club last night, who will presumably feel a bit sensitive however much they had to drink. In the fundraising auction, a box at the Proms with Penny Mordaunt went for £20,000, and a night in with Michael Gove (the mind boggles) sold for £25,000, the Daily Mirror reports – but dinner with Mel Stride is thought to have gone for £1,100. One notable absentee: Rishi Sunak, who only appeared via a video message. In any case, you can see why they want the money: in the second week of the campaign, new figures from the Electoral Commission today revealed they raised less than £300,000 – compared to £4.2m for Labour.

Suella Braverman will have been horrified to learn of one ingredient on the menu: dessert was a chocolate and tofu marquise. No word on whether it came with a copy of the Guardian.

Quote of the day

At one point I asked if I could sit on his lap. He said: ‘No, you can’t, you cheeky bugger.’ And that was it.”

Tom McTague, political editor of Unherd, telling Semafor’s Flagship newsletter about an encounter with Ken Clarke during the former’s days at the Daily Mirror dressing as a chicken to follow Conservative politicians

Number of the day

***

99.8%

Public sector net debt as a proportion of UK GDP last month, according to the Office for National Statistics – the highest level since 1961.

Dubious photo opportunity of the day

Angela Rayner and Ed Miliband blow a hole in their Proper Fan credentials by smiling while watching England v Denmark.

Andrew Sparrow explains it all

The pick of the posts from the king of the live blogs

15.45 BST | Nigel Farage’s claim that Ofcom is “rigging” the election: While some polls have shown Reform UK neck-and-neck with the Tories, plenty of them haven’t. The Guardian’s poll tracker, which tracks average figures from all published opinion polls, shows the Tories six points ahead of Farage’s party, the FT’s tracker also shows them six points ahead, and Politico’s tracker has the Tories four points ahead.

If Ofcom is conspiring to keep Farage off the TV news, it does not seem to be having much success. Smaller parties like the Greens regularly complain that he attracts far more news coverage than they do.

The Farage claim can be seen as evidence of how enthusiastically he is embracing populism, a political approach founded on assertions that the interests of “the people” are being thwarted by some sinister “elite”. Populism often overlaps with a willingness to promote conspiracy theories.

Follow Andrew Sparrow’s politics live blog every day here

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What’s on the grid

Tonight, 7pm | Reform leader Nigel Farage interviewed by Nick Robinson on BBC One as part of Panorama’s pre-election series.

Tonight, 7pm | Welsh leaders’ debate on BBC One Wales, featuring first minister Vaughan Gething, Welsh secretary David TC Davies, Plaid Cymru leader Rhun ap Iorwerth, Lib Dem Jane Dodds and Reform’s Oliver Lewis.

Tomorrow, 7.30pm | Latest Savanta poll released.

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