July 24, 2024

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How Keir Starmer and Rishi Sunak differ on taxation, health care, housing, and education

3 min read

It’s a big few weeks for U.K. politics as the countdown (now at 21 days) to the general election is on. 

This week, the front-running parties in the election—the Labour and Conservative (or Tory) parties—launched their manifestos. Each group revealed its plans if elected into power, including on taxation, health care reform, housing, and education. 

Here’s a look at the top policies from each party’s manifesto, where they stand on these key topics, and the different directions they take.   

To tax or not to tax, that is the question

The two parties differ the most on this topic, with the Tories wanting to slash taxes, while the Labour Party wants to hike them.

Conservatives: Prime Minister Rishi Sunak has pledged over £17.2 billion ($22 billion) in tax cuts as the tax burden has climbed to its highest since World War II as a share of the economy. The measure will be funded by a sizable welfare spending cut and any savings accumulated from cracking down on tax evasion. 

The tax cuts include a reduction in National Insurance contributions, which could cost the Treasury about £10 billion ($12.8 billion) in lost tax income.

Labour: Unlike Sunak’s plan, Labour’s Keir Starmer wants to raise about £8.5 billion ($10.9 billion) through tax increases such as VAT and windfall tax hikes, in addition to tapering down tax breaks for non-domiciled individuals. The taxes target different areas from what Sunak outlined, and Starmer made a point to delineate the two things.

Starmer wants to cap corporate taxes at 25%. Relatedly, the party wants to close a loophole that allows private equity managers to pay a lower rate of capital gains tax on investment returns.   

“We will not increase National Insurance, the basic, higher, or additional rates of income tax, or VAT,” Starmer said when launching his manifesto Thursday. 

Children and education

Conservatives: The Tories’ measures are targeted at making education more accessible, like introducing free schools for children with special needs. They also want to increase school spending in “real terms per pupil,” Sunak said.

The party announced a more nuanced plan to raise the threshold at which families must pay tax for childcare benefits. The Tories said in the manifesto that they’re eyeing mandatory National Service “for all school leavers at 18, with the choice between a competitive placement in the military or civic service roles.”

Labour: Starmer, too, has many measures aimed at the education system and U.K. youth. For one, he wants to recruit 6,500 new teachers to overhaul the education system, funded by tax breaks offered to private schools.

Separately, the Labour Party also plans to lower the voting age threshold and support parents with free breakfasts for children at primary schools. 

Houses and pensions

Conservatives: The Conservatives set out ways they’d help boost first-time homeownership. They also want to introduce a so-called triple lock plus system guaranteeing that pensioners’ state tax isn’t subject to any tax levies and that they receive tax-free allowances.  

Labour: Labour has pledged to invest more pension money in U.K. companies. To support that effort, it plans to set up a National Wealth Fund with £7.3 billion ($9.3 billion) to attract private sector investment in addition to public investment.  

Health is wealth

Conservatives: The Conservatives plan to increase NHS spending above inflation to expand the recruitment of nurses and doctors. The group also plans to spend £2.4 billion ($3 billion) on training more medical professionals by the end of the next Parliament and wants to address the “sick note culture” by offering more mental health services.  

While it’s unclear how they plan to achieve this, the Tories also want to introduce artificial intelligence in hospital operations and improve NHS productivity.    

Labour: Starmer’s plan is to significantly cut NHS wait times—with 40,000 new appointments opening up each week. The effort, he said on Thursday, would be funded by doubling down on tax avoidance cases and “non-dom loopholes.”

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