Transcript: Campaign catch-up — Labour’s dash for growth

This is an audio transcript of the Political Fix podcast episode: ‘Campaign catch-up — Labour’s dash for growth’

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Lucy Fisher
Does Labour’s promise to boost growth add up? Welcome to Political Fix from the FT with me, Lucy Fisher. This week, Labour’s Rachel Reeves has been laying out her plans to fund the party’s priorities without, she says, resorting to tax rises. The FT’s economics editor, Sam Fleming, interviewed the shadow chancellor about her prospectus and he’s with me here in the studio now. Hi, Sam.

Sam Fleming
Hello.

Lucy Fisher
Also here today is Helen Miller, deputy director at the Institute for Fiscal Studies, the independent economics research institute which is of course looking pretty closely at the challenges facing the next government. Hi, Helen.

Helen Miller
Hello.

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Lucy Fisher
So I want to focus on Labour’s economic plans in this episode. We’re now less than two-and-a-half weeks out from polling day. Labour’s 20-point-odd lead looks pretty stubborn, so I think with increasing certainty — and that includes the Tory public messaging — we’re all looking at Keir Starmer heading into Number 10 and Rachel Reeves heading into Number 11.

To Sam, you sat down with Rachel Reeves a couple of days ago to talk to her about her plans. Before we drill into the detail, just tell me, how did she seem? Nervous? Confident that she’s on the cusp of power?

Sam Fleming
I think Labour are obviously very anxious not to suggest they’re taking it for granted they’re going to win office. But she seemed pretty bullish. She came into the office on Friday for our interview with me and George Parker, our political editor. She talked ahead of a meeting of the shadow infrastructure council that she held on Monday, which is a group of business leaders talking about wealth creation, talking about this growth drive that Labour think they’re gonna be able to foster when and if they come to power.

And so the big message was really — or at least the message she wanted to project — was that Labour is ready to have a very close dialogue with business, wants to reset the party’s relationship with business because it’s all about fostering investment, inward investment, but also domestically driven investment and having a very close relationship with key business leaders in the hope that will help galvanise the economy.

Lucy Fisher
And she also seemed to sort of want to avoid some of your questions on tax, saying, you know, I’m not interested in fiddling around with tax. My key mission is around a dash for growth. So what are her plans for growth? And are they credible?

Sam Fleming
Well, as I said, they seem to be driven by the idea that if you have a close relationship with business, that if you create a very stable political platform after all the upheaval of the recent years, that will create, as I say, a platform on which the private sector will have greater confidence, begin to invest. They’ve also coupled that with ideas on planning reform to ease barriers towards the construction of new infrastructure and housing in the belief that is a kind of in a sense of potential free lunch. It’s a regulatory change but not a huge fiscal injection by the government, which hopefully unlocks growth as well. She also mentioned the relationship with the European Union as an area where there could be potential for a reset and fewer barriers for business. So those are the kind of ideas they’re throwing around in terms of growth policy.

Lucy Fisher
But I want to drill down into some of the detail of all the measures you mentioned. Helen, what’s your sort of 30,000-foot assessment of what Labour is promising when it comes to the economy?

Helen Miller
So I think Rachel Reeves is absolutely right to identify that economic growth is key. It’s the holy grail. It’s what we absolutely should have our focus on because it would make everything easier and it has been, you know, very, very bad for, you know, the last, you know, decade and a half. So I think the diagnosis of that being the key issue is right. And as I mentioned, I think they’ve got some areas where they’re starting in the right places. So planning and, you know, being a bit boring and stable will help boost investment.

I think that the issue is that, well, two issues: one is that I think there won’t be enough quickly enough to get out of the bigger fiscal predicament. So they’re going to inherit a situation where the books have baked in basically some spending cuts for unproductive departments. And if you want to stick to the fiscal rule that Rachel Reeves herself has set out — so not what I think it should be, what she says she thinks it should be — if you want to stick to that and you don’t want to raise taxes and you don’t want to cut spending, that’s not gonna work. You have to do one of those things. And sure, growth might go up, hopefully will go up, but I don’t think it’ll go up by enough or quickly enough to get around that predicament.

The other thing I’d say on the growth stuff is that they have a lot of other things in their manifesto that are kind of plans to plan. So I’ve identified some of the big challenges across the board, including the ones I mentioned, but also on things like education. And I see they’re gonna have strategies and reviews and that’s great. But that also takes time. That means they need to think about things and haven’t got plans ready. So again, it could be good for growth. But that’s not gonna have the OBR score in that growth come September or October. So you know maybe the right starting point for a lot of this. But I think we shouldn’t be assuming that it’s gonna be enough to face those big fiscal challenges.

Lucy Fisher
And at the IFS you talk about a conspiracy of silence — in fact, not just from Labour, but all the main parties — about the reality of tax and spend and the billions of pounds worth of cuts coming down the line, and unprotected services. Tell us a bit more about what you mean by all that.

Helen Miller
Yeah. So you’re right. It’s true of all the main parties. Maybe the Green party might be an exception here of a party that’s kind of accepted it. But outside of that the basic issue is that we’ve got a situation where, you know, taxes actually already are higher than they’ve been since the second world war and spending is actually quite high. But despite that, for various reasons, including the interest is now much higher than it was just a couple of years ago, the welfare bill is shooting up because there’s more people claiming disability benefits. Public services are struggling.

And if you look at the OBR book, so the kind of what the government will be handed when they sit down to do their Budget, it has, if you wanna protect some departments like health and defence, then the other is what we call the unprotected departments — the ones that aren’t getting as much love — are going to see spending cuts. So to write their Budget they’re gonna have a situation where the OBR says, well, here’s your baseline. You protect these departments, you have to cut these other departments. And there are still tax rises in the pipeline. So freezing income tax thresholds, that’s about £11bn coming out of tax. The baseline assumes that fuel duty will go up in line with inflation. If you wanna do it you gotta find more money not to do that. So that will be the baseline.

So they either have to accept that baseline and say, well, we’re gonna cut spending and therefore we don’t know. The conspiracy of silence says, well, where are you gonna cut it? Is it gonna be adult social care, child social care? Is it prison places? Is it gonna be more like, what is it gonna be? Or you have to say, we’re gonna find some more money to not make those cuts. And then the question is, well, what money are you gonna find? And that’s the conspiracy of silence.

Unless they get very lucky and growth just surprises on the upside, which, you know, may happen, but hoping for that’s not a plan; unless that happens, that is the choice they are going to have to make. And at the moment, I genuinely don’t see, partly because, you know what Rachel Reeves was talking about to Sam in the interview, I don’t see what they’re gonna choose. They’ve ruled out changing the fiscal rule, which they could do. They seem to have ruled out tax rises. And they’ve ruled out austerity. They can’t rule out all those three things. So I really don’t know what . . . Something has to give. And it’s not clear to what’s gonna give.

Sam Fleming
And the other thing is they say they don’t want to ratchet up borrowing either. I mean, this is the thing. There’s a long list of things they say they’re not going to do. And the answer when you push them on all those, so how do you square the circle, Helen’s been explaining, is growth. And they say that this isn’t hope. This is a prospectus for growth. And the growth will come back and that is the denominator in the debt-to-GDP ratio, which will solve our problems.

But as I say, I mean, it’s very difficult to square the circle. And what really struck me in the interview was the lengths to which Rachel Reeves went to say that they really do not intend to raise taxes, at one point even jokingly volunteering to submit herself to a lie-detector test as we were pushing her on. Is there some secret plan? No, absolutely not. And this is her insistence. It has been. But she was really quite strident on this point. And so everyone — IFS, all the other think-tanks, the newspapers, everyone is scratching their heads really on Labour’s plan because they can’t quite see where the money’s gonna come from.

Lucy Fisher
And Sam, just remind listeners. Now we’ve had the manifesto, what is Labour pledging in terms of ruling out tax rises? And where is there still a little bit of wiggle room for them to fiddle around the edges?

Sam Fleming
Well, so they ruled out the big taxes in terms of quite clearly that. So no income tax raises, no VAT. Corporate tax as well, they’re not going to increase that. So the big tax is national insurance. All the big taxes, they’ve said they’re not going to move on those. And they insist that they have no plans on other taxes like capital gains tax to increase taxes beyond a very narrow targeted list of tax hikes, which they have long ascribed to. And those are on other carry in private equity, for instance, VAT on private schools. And then some tax avoidance measures which raise around £5bn. So apart from a very small laundry list of tax increases, which we’ve known about for a long time, they say that’s it.

Lucy Fisher
Although I do think we have to distinguish between the sort of the tax pledges, what they call the tax lock for workers ruling out VAT, income tax and national insurance rises on the one hand, and then some of the other areas where they say no plans.

Sam Fleming
No plans.

Lucy Fisher
In journalistic speak means well, yes, we may actually have plans further down the road.

Helen Miller
Actually, can I just . . . Even on the big pledges I mean, obviously Sam’s right, the income tax, NICs and VAT, that’s two-thirds of revenue. That’s a huge chunk out. I thought it was interesting the manifesto, the way they worded the income tax pledge. So they said in the manifesto wording: no increase in the basic higher or additional rate of tax. So if you just took them at that and thought that was what they meant, that does give you some scope to change income tax. So you could, for example, reduce the higher rate threshold, you could change pensions tax relief. So in principle it may have left themselves wiggle room.

I think what’s confusing is if you see them briefing it on the news and in newspaper interviews, what they’re talking about is no income tax rises. They’ve been much looser with the terminology and the whole no increase on working families. I don’t know what that means. But in print, if you just, if you (inaudible) it very widely, that’s basically no tax ever, because most taxes ultimately affect working families. But if you just meant something narrowly, maybe there’s some scope there with an income tax. But I don’t know. I mean, there’s the politics there is interesting. But they did word it, I mean, with NICs they just said no NICs increases, no VAT increases, but income has . . . 

Lucy Fisher
NICs being national insurance contributions.

Helen Miller
National insurance contributions, like basically our second income tax, which should be another income tax. We make it sound different. But they did word the income tax one quite specifically to not just say no overall. So I don’t know in future if they said it’s an increase whether voters would hold them to their TV interviews or to their manifesto wording.

Sam Fleming
I think, well, who knows? But I suspect voters would hold them to their TV interviews because that’s what will be played over. The clip would be there, so people aren’t gonna have a clip of what was in the manifesto, a little cut-out of the manifesto pledge. They’ll have what Sir Keir Starmer has said and that’s what’s gonna be played back at them. So by tying their hands this firmly even in areas where they haven’t had these very, very formal pledges, on the sidelines saying, no, no, I’m not gonna do these either, I just think they’ve really tied their hands very, very tight. And so it’s hard to see what their strategy is here.

Lucy Fisher
Well, politically, I think it’s obvious that they believe they couldn’t go further than they have with leaving any mystery over their tax plans. And already Rishi Sunak’s attacking them relentlessly. Although the Tories are 20 points behind Labour in the polls, I’m told by campaign insiders at CCHQ that they are pleased at the moment that Starmer is, you know, and all his front bench are continually being asked about tax rises. On Monday we saw Jonathan Ashworth have to rule out changes to council tax bans, for example. So the Tories believe their attack is working. They’re making Labour sort of fight on the territory they want Labour to be fighting on. Sam, do you think that Labour’s commitment to future spending restraint is realistic? Or do you think that once we get to the other side of the election if, as the polls suggest, Labour win, they’re somehow going to have to go back on their tax pledges?

Sam Fleming
Well, they’ve said we’re not going to have a return to austerity. That’s their big slogan on this. And yet, as we’ve been saying, where does the money come from? My sense is that it’s gonna be very difficult for them to stick with the sketch on the envelope, the public spending envelope that Helen’s explained. I mean, these are very, very steep declines. It would have been difficult if we thought the Tories were more likely to win to see how they would stick to this kind of restraint on the unprotected departments. So what one of them is 1.9-3.5 per cent real-terms of cuts per year in the next spending review. So they come in, they need to pencil in spending plans pretty quickly for 2025 because the current spending framework lapses at the beginning of that year.

So it’s not even clear whether they want to do a one year, emergency one year spending review and then do a longer-term settlement after that or whether they want to go straight in and go the full hog and do a three, well, they’re normally three-year spending reviews. We don’t know where they’re gonna land on that. But I mean, given the push for, you know, more generous pay from the public sector, given the clamour for better services, given the pledges they’re making on the NHS and other departments to turn around the degradation of public, of the quality of public services, it’s really difficult to see how they can maintain cuts of that magnitude. And so, again, where does the money come from?

Helen Miller
I think it’s also particularly difficult given the kind of historical context. If we’re sitting here in 2010, we’d have been saying, OK, it’s difficult to cut spending. But governments did cut spending. We’re not in 2010. We’ve had like 14 years now of actually a lot of departments pushing up local government, which do seem to get a lot of, you know, lack of loving, getting big cuts. So, you know, the easy cuts where you can just cut a bit of efficiency. So you cut some of the (inaudible) off. That kind of happened. So we are now definitely eating into public services. Now that’s a political choice. You absolutely, you can have a smaller state. We don’t have to have a state that’s this big. You could imagine a state that’s smaller and does less.

The other challenge is, what you can’t do is just keep cutting budgets but asking the state to keep doing the same thing. So take local government. If you want local government to provide all the things it needs to provide, including adult and child social care, then you need to provide the funding. Or you need to say, we’re gonna provide less funding. I’m gonna reduce how much we ask you to do. So I think you can’t, we’re not in the easy territory of just shave a little bit off the top. I think you have to make big . . . If you’re gonna cut, make decisions about what is it the state is gonna do and what is it gonna stop doing. And that’s not easy stuff. That’s big decisions, I think. I think that’s what, that’s the conspiracy of silence here. It’s like you can do it, you could choose to do it. But what are you going to cut? I think voters, you know, I think would like to know what we’re talking about here, which services go.

Lucy Fisher
I think another big difference between now and the sort of the 2010 coalition period is a Labour government. Cuts to public services for Labour are just really difficult to see politically how that would happen. Sam, you mentioned the spending review coming up. Big choice for Rachel Reeves whether to do a kind of a one-year exercise or the full three-year, multiyear exercise. There’s a suggestion there isn’t going to be an emergency Budget because she wants to allow the OBR to have the full 10 weeks to score all her proposals. So how do you think the first few months of a Labour government, if that’s what we’re going to get, will pan out? When will the Budget be? Is there anything she can introduce in the first days, weeks to show the kind of Labour’s getting on with its plan for the economy?

Sam Fleming
Well, you could certainly see a lot of, for example, what she’s been doing, dialogue with business. She talked about a big business investment summit. I’m sure we’ll hear a lot about growth. I think you’re absolutely right that she’s been pretty clear. She wants to give the OBR the full time it needs to prepare its forecasts. So that really points us towards a Budget, potentially September, but more likely, I think October. So not what we saw when George Osborne came in in 2010 and did an emergency Budget really quite soon after the election. And arguably you don’t need really. So the framing at that time was the sovereign debt crisis. So the government needed to act quickly. I think that the backdrop isn’t the same in terms of the volatility of the markets, which might necessitate a really rapid Budget. So you can see why they want to give themselves a bit of time before coming in. So but I would imagine in the interim, you’d hear a lot about this growth strategy and the kind of reforms they want to do and via the King’s Speech in order to unlock growth. I imagine that first King’s Speech will be all about growth measures.

Lucy Fisher
And, Helen, just to pause a moment on the Tories, both their prospects of the future and their record. Is there anything that they are putting forward that you would like to see a Labour government nab from their manifesto?

Helen Miller
Well, I think the thing that struck me, this is not the answer to your question, but the thing that struck me about the manifesto is just on tax how much they are ruling out. So were they to come to power, miraculously at this stage, then they have really tied their hands. On tax they’ve ruled out basically everything. In fact, they even went to the trouble almost as if they were trying to, you know, wind me up. (Lucy laughs) They went short of not just saying we’ll rule out big taxes, but listed very specific relief scenarios they wouldn’t reform. So in that sense, I sort of hope that Labour resists any more of taking of that. I mean, there really wasn’t very much in the Conservative manifesto, at least on the kind of tax side other than all these things rolling out. Obviously, a big NICs cut, a national insurance cut. That’s a political choice if you want to cut taxes, so I suspect Labour won’t pick up that and find the money for that. One thing they did try to address was the rising welfare bill. So the Conservatives would like to cut, try to get £12bn out of that. And that’s extremely ambitious. For the . . . 

Lucy Fisher
That’s an interesting dividing line, right, because Labour, you know, not talking about cutting the welfare bill.

Helen Miller
Yeah. But also the kind of background to that is that, you know, benefits related to health conditions are rising very, very quickly. I mean, they’ve gone up loads in the last couple of years and they’re forecast to keep rising. So actually, even if the Tories or somebody managed to get £12bn out of the Budget, that would leave the Budget around what it is today, would just stop the future growth. Actually, it wouldn’t be cutting from where we are today. It’d be stopping the future growth. So there is a bit of a puzzle here as to why so many more people are claiming, you know, health-related benefits. I mean, what’s going on with the health of our population is the underlying question.

So I think, you know, regardless of whether they want to make big cuts or not, I think looking at that area and saying, try to get to grips with what is happening with the welfare bill, why are so many adults finding it necessary to claim disability-related benefits? Is it an underlying rise in disability? What kinds of conditions is it? Do they need other kinds of support to help them, you know, deal with those conditions? Or is it to do with the cost of living crisis and people changing which benefits they claim, or what? But something is going on there. So I’m not suggesting that the Labour party just pick up and adopt the Tory measures. So I think getting £12bn would be very ambitious. But I think looking at something about what is happening there would make sense for an incoming government, regardless of your political preference. It’s just like something is going on.

Lucy Fisher
And Sam, anything from the Tories on the supply side reforms they’re putting forward that interest you?

Sam Fleming
Well, I mean, I just obviously, I think this point on welfare, the main issue there to my mind was there was very little detail as to where they get this £12bn figure from. There seemed to be an aspiration when it comes to disability benefits. But it wasn’t a policy, by any means. And a lot of what they said in terms of the savings they thought they’d make on welfare have been measures that have previously been scored by the Office for Budget Responsibility. So in terms of the notion of whether their tax-cutting measures are funded or not, I didn’t find them particularly credible or really remotely credible in terms of how they said they were paying for these.

Lucy Fisher
And one thing I hear every Tory cabinet minister on the campaign trail really talking up is their record on boosting the UK’s position in the rankings as an exporter. It’s gone from being seventh-biggest exporter in the world in 2021 to fourth-biggest exporter. Is that a significant claim, Sam? What should we make of that?

Sam Fleming
The UK exports have been an interesting story. UK services exports are really doing very well and the UK remains a top-tier services exporter, are one of the top two or three, along with the US. So that has been a genuine success story. Alongside that, it has not done well on goods exports. And there is evidence of a Brexit effect there because of the trade barriers, the dismantling of supply chains with EU companies and so on. So that’s an area where the UK doesn’t have a very good story to tell.

So I think the resilience and strength of services exports is clearly one of the areas that an incoming government, be it Labour or be it Conservative, will want to try and build on. The other side to that is on the good side, a real lack of clarity from both parties in terms of how they would improve that position and particularly what, you know, in concrete terms they could do to remove some of the barriers that have been created by Brexit with the EU, which remains the dominant export partner and will always remain probably the dominant export partner for the UK.

Lucy Fisher
Yeah. And Helen, I mean, Sam also mentioned earlier in the pod, you know, Rachel Reeves very much flagging trying to improve relations with the EU, knock down some of those barriers to trade. How credible is that plan? You know, how much do you think the EU will be willing to sort of weigh into retooling the relationship?

Helen Miller
Yeah. The honest answer, I don’t know. I mean, I think as you’re suggesting it, it’s a political question by and large, right? So it’s not just we can’t just decide how we would like to trade with the EU. The EU has to want to trade with us in a similar way. And of course, that’s gonna be the tricky thing. We might like, want open relations, but we can’t just pick and choose and have the EU just accept that. So I think, I suspect — I’m, you know, not a trade expert — but I expect they’ll find the similar problems that previous people have found that you go to the EU and it’s a negotiation and you don’t get your own way, and therefore we might want to pick the bits we like but we, you know, you just give and take there.

So I think it’ll just be a continued political thorny issue, which is another reason why thinking about the growth, yes, we should be trying. Yes, you know, trade with our closest partner would, you know, help. But I don’t think the OBR’s gonna score them a big increase in growth on the basis of increased trade, because you’ve opened some negotiations. I think the OBR rightly wants to see a bit more evidence that things are moving before they put them in. And that matter, just to be clear to people, that the reason it matters is because, you know, the OBR will have their forecasts. They’re gonna forecast the size of the economy going out, you know, five years, say, maybe 10 if Rachel wants to have a longer forecast, but in some future period, and they’re gonna predict growth over that period. And that’s gonna, you know, determine whether debt is falling at the end of the five-year period, which is what matters for her fiscal rule. And therefore it matters what the OBR thinks about it today. It’s not you know, so saying we’re gonna, we’ll fix it in five years is great, but they’re gonna estimate today what they think will happen. So I think that’s why, you know, thinking it might be great in five years’ time. But the OBR’s gonna want evidence today that makes them confident enough to put it in their forecasts.

Sam Fleming
I think it’s fair to say that the rhetoric on the EU is more conciliatory under Labour. And that’s certainly the mood she’s trying to and Sir Keir Starmer are trying to change the mood music vis-à-vis the European Union. But when it comes to actual tangible measures, it’s very difficult to see where they’re going to make a lot of progress in EU relations. So one area that Rachel Reeves mentioned to us was the area of chemicals regulation, where she said she didn’t think that voters had voted for Brexit because they wanted to see divergence in chemicals regulation from other parts of Europe. I think that’s probably a fair conclusion. But how you actually go on and remove barriers with the rest of the European Union in the area of chemicals or indeed any other products? It’s very difficult when you’re not part of the customs union or the single market. And these are red lines for Labour. They’ve said they’re not going to re-enter the single market or the customs union.

And then when you think about so what do you have to offer as the UK to the European Union in any kind of discussions about improved relations, you have to think about what the UK brings to the table. Now it can bring an offer on security relations, but another area where the EU is really interested in doing engagement with the UK is on youth mobility. But Labour said they don’t wanna move in that area. So they need to think about this more in terms of what are they going to bring to the table with the European Union, what do they have to offer? And they don’t seem to be thinking in those terms, at least not yet.

Lucy Fisher
Now, if we just must spend a moment looking at how business has reacted so far to Labour’s plans for stronger workers rights. I think you’ve both pointed to some of the supply side reforms, planning reform, the plans to bring in new housing, bringing down the cost and speed of infrastructure delivery. There’s many proposals Labour put forward that answer what businesses have asked for. But where there is an element of consternation is around these ideas to give workers rights from day one to sort of strengthen workers rights in other ways. Helen, how do you see this playing out if Labour come to government?

Helen Miller
Well, I think it’s worth saying I think there is a fundamental tension there between, on the one hand, reasonably wanting to protect individuals and wanting to give them rights. They can’t just get unfairly dismissed very quickly or they don’t have, you know, unpleasant working patterns. And some people clearly do have very unpleasant, highly stressful working patterns. On the other hand, wanting a labour market — and it’s not just from firms’ points of view but from the economy’s point of view — a labour market that is flexible so that actually, if somebody is appointed and it’s a bad match, they don’t match well with that job, that match can be ended, you know, relatively quickly and easily so that people can move to different jobs and firms can get new people.

And (inaudible) wage is another example of one of these kind of supply side labour market measures. You know, the one hand, yes, people get paid fairly paid for their work. Good idea. But if you take younger people, I think Labour want to bring down the point at which the minimum wage, or whatever they’re gonna call it, the national living wage kicks in. Well, it could be some young people here who are currently working for a lower wage than Labour would plan, but who are getting good training, good skills, getting onto the ladder. And actually you might stop some of those jobs happening. So there’s a fundamental trade-off there. It’s not just a kind of a right and a wrong. So I think it will play out with, you know, maybe Labour and especially the unions that back up Labour wanting much more, you know, people getting rights quicker, getting more rights . . . 

Lucy Fisher
The ability to strike more easily.

Helen Miller
Ability to strike, maybe, having more certainty over their working patterns and, you know, related to zero contracts and having the minimum wage go further. On the other hand, wanting a labour market that’s not inflexible. So I think there’s a fundamental tension that will have to play out. I think one thing I’d say to Labour is to move cautiously in these areas. So one thing about minimum wage, looking back in history that, you know, it’s been relatively successful, but it moved quite slowly. So in all these areas you don’t want to have a sudden big bang, shock the labour market, suddenly change lots of things. I think having something where, you know, you move the minimum wage relatively slowly, you maybe extend workers rights, but don’t just suddenly change things. You sort of like suck it and see, test out, see what happens, see if it’s creating problems in the labour market, and then maybe you can go a bit further. So I think I just, you know, advise some caution.

Lucy Fisher
I think from what I can see and talking to people who work very closely with Starmer, with Sue Gray, his chief of staff and a veteran of Whitehall. They do seem to be wanting to take quite a piecemeal approach to reform in lots of areas, not just the economy. Sam, what do you make of this area around workers’ rights? We have heard from HSBC economists in the past few days, haven’t we, their concerns that the minimum wage plans could, you know, raise unemployment and ultimately lead to mortgage rate rises?

Sam Fleming
Sure. Yeah. I mean, I think if we look at what’s happened on the minimum wage, national living wage over recent years, it’s been an enormous success story. And so, I’m maybe slightly less worried about that aspect than they are. I would certainly say overall, the UK is seen as an attractive place to invest, in part because of its relatively flexible labour market. And as Helen said, you just need to tread very carefully if you’re gonna change these rules. Now, Labour have raised, expectations here. And there are clearly areas where action is needed, but they also need to, they’re constantly talking about the close relationship and dialogue they want with big investors and business. So they’re gonna have to tread a very, very a very fine line.

Helen Miller
If I can just add as well. I think it’s one area where ideally the government would be thinking about joining up different areas. So talking about labour markets, we have big tax differences across different legal forms. So we tax the self-employed much lower rates than employees. So actually one of the big problems we have in the labour market is that lots of people who are self-employed don’t wanna be self-employed. They’d be better off being employed. They get more rights. And actually they should be looking at tax reform in that area to try and sort that problem out alongside everything else. So it’s one where I think ruling out tax reform is one example where it’s not gonna help a broader package. You want to be looking at all these policy measures together.

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Lucy Fisher
Well, just finally in our campaign catch-up, we like to have a look at what else is coming up on the campaign trail in coming days. Sam, what are you looking out for?

Sam Fleming
Well, with my economics hat on, very much looking to the Bank of England decision, which is coming up on Thursday. We get inflation numbers right ahead of that. And then on Thursday, the Bank of England has to set rates. I have written that I think it’s a very difficult decision for the Bank of England to move interest rates for two weeks before a general election. I don’t resile from that point of view. If it were looking like a finely balanced decision, there must be an enormous temptation to pass it to the next meeting. But as it happens, it depends a bit on what the inflation numbers suggest. It doesn’t look like there’s a really compelling case for them to cut as urgently as possible because inflation does remain sticky in some areas, particularly services, the service sector. So it seems pretty likely that they’ll hold rates unchanged. But clearly, that will be a decision which is watched extremely closely by all the politicians.

Lucy Fisher
Helen, how about you?

Helen Miller
Will be my tax hat on. I’m gonna be looking for whether Labour rules out any more of its tax options. I mean, I really hope it doesn’t. My advice is just don’t go any further. But you’ve already seen pressure where, you know, the manifesto had some tax locks. They’ve gone a little bit further under pressure from the Conservatives. The Tories will keep putting pressure on them to try to rule out some more. So I’ll be keeping a very close eye on what they say and whether they making (inaudible), it sounds more like we don’t have any plans versus we’re not going to do because the more they rule out, the harder life’s gonna be in future. So I’ll be keeping a close eye on that.

Lucy Fisher
Great. As for me, I’ll be looking out for registration to vote closing on Tuesday at midnight. I think Electoral Commission research found that nearly 8mn people in the UK were not registered in 2022, so I hope that figure has improved. Sam Fleming, Helen Miller, that’s all we have time for today. Thank you for joining.

Helen Miller
Thank you.

Sam Fleming
Thanks a lot.

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Lucy Fisher
That’s it for this episode of the FT’s Political Fix. I’ve put links to subjects discussed in the episode in the show notes. Do check them out. They’re articles we’ve made free for Political Fix listeners. There’s also a link there to Stephen Bush’s award-winning Inside Politics newsletter. You get 30 days free. And don’t forget to subscribe to the show. Plus, do leave a review or star rating if you have time. It really helps us spread the word. Political Fix was presented by me, Lucy Fisher, and produced by Audrey Tinline with help from Leah Quinn. Manuela Saragosa is the executive producer. Original music and sound engineering by Breen Turner. Cheryl Brumley is the FT’s global head of audio.

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