Fraser Nelson

# On Sunak’s maths, Tories will lift taxes by £3,000 per household

My colleague Ross Clark has shown how the Tories cooked up that £2,000 figure. They worked out the total cost of what they think Labour will do, using standard HM Treasury costings. Then, they divided that by the number of in-work households (18.4 million). This is a subset of the 21.4 million total UK households, so no pensioners or workless households. By choosing a smaller denominator, you concentrate the increase and conjure up a scarier figure. Then they quadruple-counted. So they took each year’s estimate for tax rise and then added them together over four years and – presto! – you end up with £2,000.

But let’s apply a similar method to the published plans of the Conservative government. We don’t need to guess what the cost of government would be: the projected tax haul figures were published by the Office for Budget Responsibility (OBR) and updated in March after the Budget. It will be £1.02 trillion in the current financial year. That’s with the tax/GDP ratio at 36.5 per cent. Let’s use that as our baseline. The OBR says the Tories plan to increase taxes to 37.1 per cent of GDP by 2028/29. So the 0.6-point increase works out at £20 billion more tax raised in that year than if the tax/GDP ratio (below) had stayed flat.

Add up all four years (as the Tories did for their Labour calculation) and you end up with a £320 rise in year one, £620 in year two, £930 in year three and £1,150 in the final year. So: a sum of £3,020 per working household. Except this would be just as misleading as the £2,000 figure that Sunak used so often in the debate last night.

Given that this is a nonsense exercise, there are several other ways to cut it. If you take this year's tax take in cash as a baseline (rather than the tax/GDP ratio) you can get conjure up a figure of £9,000 of Tory tax rises. Or add a fifth year of government. But spin aside and we're left with one significant and important fact: the Tories genuinely do intend to take the tax burden to the highest seen in the lifetimes of most voters. They are in a big old glass house when in comes to tax rises – yet here they are, still throwing stones. It’s a risky strategy.

There are serious issues at stake in this general election and the Tories have just released nonsense figures with fake attribution then given them to newspapers, who took it on trust. I’m not sure that this will help their chances.

PS I’ve had a couple of calls on how we did the maths. It is fairly simple. Tory UK tax plans (unlike Labour spending) are not secret or even a matter of dispute. They are published by the OBR, which is clear that the Tory plans will mean £175bn more in tax by 2028/29 (to pay for surging welfare, etc). So these figures are plucked from OBR databank and put column B below.

Now, any rises need to be calculated against a baseline. You can choose do this three ways: simple cash terms, adjust for real terms or (kindest to the Tories) assume a baseline of constant tax/GDP ratio. We go for the latter to produce the most modest figure. To produce a ratio, we need GDP from the OBR (column c). Then we express current tax plans as percentage of GDP (col D). We compare this ££ figure (B) against this hypothetical of tax/GDP being constant (E) and look at the implied ££ difference each year (F=B-E). Then add them all up in the four-year cumulative figure as per nonsense Tory methodology. Then divide the £55.5 billion total by 18.4m (more nonsense as the number of in-work households would rise by 2029, but there are no forecasts) and you get £3,018. And a nose the length of a runway.

A B C D E F
National account taxes (£bn) GDP (£bn) Taxes/GDP Taxes at constant 36.5% of GDP (£bn) Difference (£bn)
2024‑25 1,016 2,786 36.5% 1,016 0.0
2025‑26 1,055 2,875 36.7% 1,049 5.8
2026‑27 1,100 2,985 36.9% 1,089 11.5
2027‑28 1,146 3,094 37.0% 1,129 17.1
2028‑29 1,191 3,207 37.1% 1,170 21.2
Total (£bn): 55.5
Per working household £3,018

##### Written by
Fraser Nelson
Fraser Nelson is editor of The Spectator