One hundred and eighteen days into the Labour government, and finally we get to see what the slogan on the front of the manifesto – Change – really means. And you might be forgiven for feeling rather blindsided.
Because the tax and spending plans outlined today by Chancellor Rachel Reeves in the first Labour budget are as hefty and historic as the Labour manifesto was vague.
In that document there are just a handful of pages of costings, and a commitment to £8bn of tax rises to fund spending commitments for more NHS appointments and more teachers.
There was nothing in those plans that signalled the £40bn of tax rises by the end of this parliament or the £76bn in increased spending.
Budget latest: Experts taken aback by ‘massive’ tax plans
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In full: Sky’s interview with the Chancellor
This is the biggest tax rising budget since 1993, with seismic spending and borrowing to invest. It is quite simply massive.
Painfully cautious when trying to win the election, now Labour is brazenly bold, having won a majority. But the question is do they really have a mandate for the tens of billions in new tax and spend commitments.
Repeatedly asked about tax and spending rises in the run-up to the election to avoid austerity and fund our hospital and schools, transport networks and communities, the prime minister told me – clearly – he had “no plans” to raise taxes beyond the manifesto commitments, while shadow cabinet minister after shadow cabinet minister insisted that improved public services would come through a combination of extra funding via economic growth and reform.
It simply didn’t add up then, and the cost is being laid bare now.
The argument made repeatedly to me by the chancellor on Wednesday is that these choices were made after Labour got in and looked under the bonnet of the public finances.
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Read more from the budget:
The key announcements
Chancellor looks to raise £40bn in taxes
British companies face uphill struggle
Reeves told me: “When I became chancellor in July, officials at the Treasury presented me with information that the previous government were overspending to the tune of £22bn more than they had planned.
“In addition to that, there were compensation schemes that the previous government had signed up to, but had not budgeted for – infected blood and the Post Office Horizon scandal.
“And the previous government hadn’t done a spending review. And so as a result, we did need to raise taxes in this budget to put our public finances on a sound trajectory.”
A stretch to blame it all on the Tories
So her answer is to pin it all on the economic inheritance from the Conservatives and the so-called £22bn black hole.
But it’s a stretch to say the least.
Even if you accept a chunk of it, £8bn of that “black hole” comes from Labour’s decision to accept pay recommendations for public sector workers (did they really not expect to need billions to do this before the election?).
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An ‘eyewatering’ rise in taxes
And on spending, did Labour really not think more investment was needed in the NHS before the general election, when health thinktanks were all saying it did?
Then, shadow health secretary Wes Streeting told me repeatedly that it wasn’t about more money – it was all about reform and then economic growth.
Fast forward a few months, and Reeves on Wednesday announced an extra £25bn spending boost for the NHS over the next two years.
A traditional left-wing budget
Compare it to the Corbyn manifestos of 2017 and 2019, which the public roundly rejected, and the tax rises aren’t a million miles off.
Rachel Reeves rejected a similarity to Jeremy Corbyn. Pic: House of Commons
In 2017, Corbyn proposed a £43bn increase in taxes – while the 2019 manifesto, emphatically rejected by the public, proposed £80bn of rises.
When I asked Rachel Reeves if she was a half-fat version of Corbyn’s full-fat tax take, she roundly rejected it, saying: “I’ve never been compared to Jeremy Corbyn. I disagreed with everything that he was doing.”
But you take the point: this is a traditional – many would say left-wing – Labour budget, with a massive tax and spend envelope.
Corbyn at least levelled with the public in what he intended to do. Voters who crossed the floor in the election might well now regret it.
One Conservative MP told me tonight his inbox was filling with angry emails over changes to capital gains tax that are going to hit farmers who work their land after the chancellor announced combined business and agricultural assets worth under a million would continue to be exempt from inheritance tax, but above that there would be a 50% relief, at an effective rate of 20%, from April 2026.
And those who own shares, and from employers who are seeing hikes in their national insurance payments.
Read more on the budget:
See how you will be impacted with calculator
Sunak slams ‘broken promise after broken promise’
Promise of short-term pain for long-term gain
A defining budget for this government
We at least now know what this Labour government is about.
This budget will define the Starmer administration in this parliament and the shape of the country beyond.
Such a big departure from manifesto promises – Labour has spent months blaming the Tories for the choices Rachel Reeves now makes.
But this is not really about the Conservatives anymore, it is about Labour’s – in their own words – “unprecedented” plan to rebuild Britain, and whether voters will go along with it or feel misled.
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The gamble is that by protecting the pay packets of working people and front-loading massive spending plans, funded by the wealthy and business, that towards the end of this parliament, Labour can say it has helped its core voters and improved Britain.
It’s a huge gamble with no certainty it will pay off. But at least they have finally thrown the dice.