Starmer is already running out of money – and it could sink Labour

The party leader is making spending pledge after spending pledge, but is less willing to set out how they’ll be funded

General election campaigns have a habit of getting out of control. Who can forget the chaos into which Theresa May’s government descended in 2017 when she attempted to resolve the eternal problem of social care funding with what came to be known as her “Dementia Tax”?
It was that ill-thought through policy that, more than any other, contributed to the loss of the Conservative majority and the eventual expulsion of May from Downing Street two years later.
It’s an example to which Keir Starmer should pay special attention. Like the Labour leader today, May was enjoying a significant poll lead and was looking forward to the prospect of a three-figure majority after polls closed. But whereas May hoped to gain credit with voters by offering a realistic “solution” to the social care dilemma (albeit a “solution” that would have cost many voters their homes), the danger for Starmer is that the cost to the public purse of his party’s own plans are being hidden. And while such a tactic might prove successful in the short term, it is likely to become a major weakness during the chaos and drama of a general election campaign.
Under an agreement with the trade unions that fund the party, Labour has committed to establishing a “fair pay agreement” in the social care sector, aimed at reducing the demand for overseas workers by significantly improving pay for domestic workers. But shadow ministers have been reluctant to detail the cost to the public purse of such a policy, even though a significant proportion of any increase in wage bills will fall on local authorities.
It is estimated that an increase of one pound per hour in wages will cost the exchequer between £1 and £1.5 billion. And few trade union leaders appear to expect the final settlement to be at that lower end of the scale.
You can see the Conservative attack already. Far from being a “fully costed” manifesto, as shadow chancellor Rachel Reeves has repeatedly promised, Labour already stands accused of foisting an unaffordable cost onto local councils while refusing to be upfront about the size of the liability. 
Granted, there is a precedent for Labour. In 1997, it refused to say how much the introduction of a national minimum wage would cost the public sector, a stance that might have proved a drag on Tony Blair’s ambitions, had the public not already made its mind up as to how it would vote. In 2024, Starmer might have cause to fret that a general lack of enthusiasm for him and his party – despite the unpopularity of the Conservatives and a consequent double-digit poll lead – could be exploited by his opponents.
Voters nervous of any party that promises radical change at little or no cost might regard such promises as cynical at best, dishonest at worst. And how might the international money markets react if Reeves and Starmer continues to insist, at the height of an election campaign, that “fully funded” does not cover the full costs of a flagship commitment? 
Now that chancellor Jeremy Hunt has announced the abolition of “non-dom” status, removing one of the few revenue-raising initiatives from Labour’s arsenal of financial wheezes, the party may have to fall back on its oft-repeated pledge to impose VAT on private school fees. But how often has the hypothetical windfall from such an initiative already been committed to other projects?
Before the election proper, Starmer may feel tempted to renege on his promise of a fair pay agreement in the social care sector, perhaps hoping to turn it into an “aspiration” dependent on a future consultation, just as he was persuaded to ditch his previous policy of spending an annual £28 billion on green infrastructure.
But the trade unions are unlikely to settle for such a compromise, especially when other aspects of Labour’s offer – an increase in private sector provision to cut NHS waiting lists, for example – are causing disquiet among union members whose membership dues are helping to fund Labour’s campaign.
Starmer needs to address the issue this side of the campaign or risk allowing an unfunded spending commitment to derail his entire pitch to the nation. Saying nothing and hoping for the best might be the most attractive option today, but it could prove disastrous tomorrow.