Voter expectations at odds with Labour investment plans, polling data suggests

Only one in 50 people planning to vote Labour in the general election next week believe the party would cut public investment if it comes to power, according to fresh polling data. 

The survey by YouGov was commissioned by the “Invest in Britain” campaign, which advocates for greater public investment in the UK. The initiative was set up by the Economic Change Unit, an organisation that promotes new economic thinking.

The campaign said the polling showed a “big misalignment between Labour public investment plans and voter expectations” given the party’s current policies imply a fall in government spending in areas such as new roads, hospitals and school buildings unless there are tax rises.

The YouGov survey of 2,000 people found that 72 per cent of those supporting Labour believed the party would raise public investment if elected — only 2 per cent believed it would cut it. 

The Labour manifesto includes £8.6bn of tax rises and £9.5bn of extra spending beyond the existing fiscal plans it would inherit from the Conservative government. 

However, the Institute for Fiscal Studies think-tank recently described the impact of these policies as “tiny, going on trivial” and said the manifesto pledges would not prevent a Labour government from presiding over an overall real-terms cut in investment spending over the next parliament.

The IFS has estimated such cuts will amount to £13bn a year by 2028-29 under Labour’s manifesto plans. That would take public investment as a share of gross domestic product from 2.5 per cent in 2023-24 to 1.8 per cent in 2028-29 under a Labour administration.

Labour is set to inherit a tight public spending regime already planned by the Conservative government, which allows for an overall real-terms increase in day-to-day departmental spending of 1 per cent a year. 

Given a Labour government’s priorities, including safeguarding NHS spending, these plans imply steep real-terms cuts for unprotected departments such as justice and home affairs.

Day-to-day spending, excluding investment, for unprotected departments would need to be topped up by between £10bn and £20bn a year by 2028-29 to prevent real-term reductions in budgets, according to the IFS.

Sir Keir Starmer, Labour leader, said during his party’s manifesto launch that budget cuts could be avoided by a Labour government if it managed to generate rapid economic growth and higher tax revenues.

“If we grew the economy at anything like the rate of the last Labour government, we’d have tens of billions of pounds worth of investment for our public services every year,” he said.

But some economists are sceptical of Starmer’s claims and have accused both Labour and the Conservatives of ignoring serious questions about looming spending cuts.

The alternative for Labour is to raise some taxes. The party has refused to rule out increases in some wealth taxes, including a rise in capital gains tax or an end to the 100 per cent relief on inheritance tax on agricultural land.

The YouGov research found 70 per cent of those polled believed public investment had been too low in recent decades — 50 per cent of the public believed Labour would increase it, while 12 per cent thought they would cut it. 

Tom Railton, director of campaigns at Invest in Britain, said: “Labour has made some positive noises about investment, but the plans they have set out still imply big public investment cuts which are not economically credible and not what their own voters want.”

A Labour spokesperson said: “Our approach to public spending is based on strong fiscal rules which will govern every single decision we make in government.

“There will be no return to austerity with Labour and by closing loopholes in the tax system we have pledged to provide an immediate injection of cash into our public services, to cut NHS waiting lists and get more teachers into our schools,” they added.