Sir Keir Starmer is pledging to make Britain “battle-ready” by spending billions of pounds on arms factories, drones and submarines. Rachel Reeves says she will invest £15bn in trams, buses and trains for towns and cities outside London. The announcements by the prime minister and chancellor followed last month’s partial U-turn on the means testing of pensioners’ winter fuel allowance. Anyone could be forgiven for thinking the tough times were over and that money was now no object.
Nothing could be further from the truth. The spending review Reeves will deliver next week comes at a time when growth is weak and borrowing high. The brutal reality is that if more is to be spent on defence and the NHS, if the police are to be handed extra resources to tackle crime, and if pledges to hit housebuilding and net zero targets are to be fulfilled, something has to give. And that something will be higher taxes in the budget. It is just a matter of which taxes and who pays them.
