Labour says NHS and schools policies to be funded with clampdown on tax avoidance

Labour will pursue tax avoiders to fund its commitments on schools and the NHS after the government adopted its plan to raise revenue by abolishing the non-dom tax status.

Shadow chancellor Rachel Reeves is set to announce the party’s plans to raise £5bn a year by the end of the next parliament to fund its polices on breakfast clubs for primary school children and additional appointments in the NHS.

However, it is understood that only £2bn of the £5bn raised per year will fund the two policies, with the rest of the money being kept back for other uses.

It comes after questions were raised as to how Labour would fund the key pledges after Jeremy Hunt lifted its policy to scrap non-dom tax breaks, which allows wealthy individuals to live in the UK but not pay domestic rates of tax on their overseas income and wealth.

The Conservatives had consistently rejected the idea as a revenue-raising measure before it appeared in the budget last month to fund a cut to national insurance.

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Labour has said it will also raise £2.6bn over the next parliament by closing “loopholes” in the government’s plans to abolish exemptions for non-doms – a move Ms Reeves branded an “utter humiliation” for the Conservatives.

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As well as the non-dom tax status, the government also adopted Labour’s plans to extend the windfall tax on oil and gas companies, which also would have been used to fund the breakfast clubs and NHS appointments.

Ms Reeves is expected to say: “I have been clear that everything in our manifesto will be fully costed and fully funded. There will be no exceptions.

“That is why last month I promised to go through all the government documents in an orderly way to identify the funding streams to honour our commitments to the NHS and schools.

“That process is now complete and the funding a future Labour government will raise from taking on the tax dodgers will fund more appointments in NHS hospitals, new scanners, extra dentist appointments and free breakfast clubs for all primary school pupils.”

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Labour said the “tax gap” – the difference between the amount of money HMRC is owed and the amount it receives – had widened to £36bn in 2021/22 – £5bn more than it had been the previous year.

To close the gap, Labour said it would invest up to £555m a year in boosting the number of compliance officers at HMRC, increasing productivity and improving the organisation’s “dire” customer service.

It will also consider requiring more tax schemes to be registered with HMRC to ensure they are legitimate, and renew the focus on offshore tax compliance.

Chief Secretary to the Treasury Laura Trott said: “After a month of searching for a plan to pay for Labour’s unfunded spending, the shadow chancellor still cannot say how she will fill the enormous black hole in their promises. And that means one thing – more taxes.

“The Labour Party hasn’t changed. They remain committed to unfunded spending, including their £28bn a year decarbonisation promise, meaning they will have to raise taxes on working families – taking us back to square one.

“The Conservatives have introduced over 200 measures to clamp down on tax non-compliance and we are sticking to the plan to strengthen the economy so we can cut taxes, putting £900 in the pockets of the average worker and helping families to build a brighter future.”

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