Gross domestic product (GDP) fell by a less than expected 0.2% in December 2021 to equal its pre-coronavirus pandemic level (February 2020). The consensus of economists was that GDP would fall 0.6%. Overall the UK economy recovered by 7.5% in 2021. The slight fall in December can be attributed to output in consumer-facing services falling by 3.0% in the month, mainly driven by a 3.7% fall in retail trade in the face of Omicron.

Pat McFadden, Labour’s Shadow Chief Secretary to the Treasury, responding to this morning’s weak GDP figures is audacious:

“The reality is the way the Government runs our economy is trapping us in a high tax, low growth cycle. Despite government bluster, with their current plans our position is not expected to improve. The latest Bank of England forecast suggests that growth will slow to a crawl next year. That would be the slowest growth of any G7 economy. Rising taxes, rising prices, and a squeeze on wages and living standards sit squarely on the shoulders of the Conservatives.”

Even if the low-tax rhetoric of Labour lacks credibility, it highlights the strategic Tory mistake of putting up taxes on workers and destroying their unique selling point as the party of low taxes. Labour points out that the Bank of England is predicting anaemic GDP growth could be as low as 1.25% for next year. The Tories choosing the high tax, low growth path is an open goal for Labour…

New analysis from the Taxpayers’ Alliance shows the lifetime tax bill for the typical household hit an incredible £1,101,255 with 2019-20 rates, with families on the average household income now having to work 18 years just to pay off the taxman. For the bottom 20% of households, it’ll take almost 24 years. This is before No. 10 have the chance to whack up National Insurance… 

To give a sense of perspective, here’s where that £1.1 million could have got you if HMRC hadn’t not come knocking:

• Two weeks in Costa del Sol, full board, four star for two adults (peak season) every year (according to TUI): £142,002
• Detached house (average for England): £456,259
• New Audi A4: £36,030
• Premier League season ticket every year: £30,780
• National Trust Life membership for 2: £2,160
• 2 kids through university, based on three years of maximum tuition fees and maximum maintenance loans: £131,502
• Pension pot yielding guaranteed annuity of £10,800

The Taxpayers’ Alliance also point out how it would take the average household taxes of almost 4,100 families to cover the costs of benefit overpayments in 2019-20 alone. As Lord Frost said this morning, there’s no way he could return to help Downing Street out if they insist on pressing ahead with a policy of raising taxes…

Alongside this pool clip moment, at Lobby today the PM’s spokesperson similarly indicated a change in policy could be coming, saying the government “want to consider all options” regarding the rise. Hmm…

New research from the Taxpayers’ Alliance (TPA) has revealed that families will be faced with a whopping £5.2 billion tax bill on their festive spending this Christmas. Over December, the average household will fork out an extra £191.75 in taxes, including on VAT, fuel duty, sugar tax, and alcohol taxes. The TPA points out this is equivalent to 23 Tesco Finest 800g Christmas puddings, enough to serve 184 people…

The paper also shows that, as more Brits move their shopping online, the proposed 2% online sales tax would also add another £57 million to the overall Christmas tax bill. Speaking on the findings this morning, John O’Connell said:

“Despite families already forking out a fortune this festive season, the taxman has clearly decided ‘tis not the season to be jolly. After a cancelled Christmas last year taxpayers deserve a break, but HMRC’s litany of levies leave a big hole in their finances. The taxman should stop playing Grinch and leave us a bit more cash in our Christmas stockings.”

All this while inflation soars and energy bills rise…

Today Labour’s new shadow chancellor Rachel Reeves announced the party would scrap business rates to try and boost the high street – a policy that would reduce HMRC’s revenue by £25 billion. Asked about the policy announcement on Politics Live, Emily Thornberry suggested the digital services tax would be increased from 2% to 12% to pay for it – a tax increase that, even if it excluded tech firms scarpering abroad – would raise just £2.5 billion. Did Diane help with the sums?

Guido’s taken some time to look over Labour’s current tax and spend policies, and spots a rather large discrepancy between the two figures:

Spending:

• Scrap business rates – £25 billion a year
• Green investment deal – £28 billion a year
• Reinstate Universal Credit £20 uplift – over £6 billion a year
• Supported Kevan Collins’s full schools catch up package – £15 billion

Opposing the government’s tax rises/spending cuts:

• Opposed the health and social care levy – £12 billion a year
• Opposed corporation tax increase – £48 billion* by 2025
• Opposed maintaining income tax personal thresholds at the March Budget – raising £19.2 billion by 2025
• Opposed public sector pay freeze – saving £4.7 billion a year
• Opposed the temporary switch from a triple to a double pensions lock – saving £5 billion a year
• Opposed cutting foreign aid to 0.5% – saving £4.5 billion a year
• Opposed extending ability of councils to raise tax – saving £2 billion a year

Total: £170 billion

Labour’s proposed revenue raisers:

• Scrap charitable status for private schools – +£1.7 billion a year
• Increase tax on private equity firms – +£500 million a year
• Increase Digital Services Tax from existing 2% to 12% – +£2.5 billion
• Scrapping Boris’s trade yacht – £300 million one-off saving
• Office for Value for Money – Unknown
• Global 15% minimum rate of corporation tax – irrelevant as UK rate is higher anyway

Total: £5 billion

Maybe Labour in Communications was right – Starmer should stop announcing policy if he wants to get near No. 10…

*If you believe the Treasury.

What a difference seven weeks and five days make: in July, responding to a recommendation to introduce new anti-obesity health taxes, Boris rejected the proposals by saying he is “not, I must say, attracted to the idea of extra taxes on hard-working people”. Today in the Commons, the PM stood up and announced a National Insurance hike that will hit the pockets of those very same hard-working people. Would be helpful if there was a streak of conservative ideology guiding some of these statements and policies…