Sir Keir Starmer is promising to spend an extra £28 billion on green investment if he wins power but has set strict rules on borrowing and debt.
Economists said the party will have to find a way to bend fiscal rules or raise taxes to meet the pledge.
Tories said the party must be clear about its spending plans.
Labour has pushed back its £28 billion spending on its green prosperity plan until the middle of the first term of a Starmer government.
The party has also insisted it will not borrow to fund day-to-day spending and that it will reduce debt as a share of income.
READ MORE: I went to the Labour conference and here are six reasons why the Tories can win
The Institute for Fiscal Studies last week suggested Labour is looking at introducing a “public sector net worth” rule that would allow government assets to effectively offset the costs of debt.
It gave the example of the government acquiring an energy company where the addition to debt would be offset by an increase in public sector assets.
Labour insisted it can “categorically rule” out such a move, which would effectively hide government debt so it can meet the fiscal rules.
The party has also faced criticism for its plan to scrap the non-dom tax break, which typically applies to someone who was born overseas and spends much of their time in the UK but still considers another country to be their permanent residence, and use the £2 billion raised to fund a number spending commitments.
Don’t miss…
Piers Morgan’s five-word Question Time reaction after left-wing Tory fury[POLITICS ]
Fury over multi-million-pound new bus station – with no buses stopping there[POLITICS]
Keir Starmer glitter protester apologises and says he ‘crossed the line'[POLITICS]
Julian Jessop, economics fellow at the Institute of Economic Affairs, said that £28 billion is not a huge amount in terms of government spending but meeting it was likely to need a mix of economic growth and higher taxes or a change in the fiscal rules.
“I’m fairly confident they could find a way to fudge the fiscal rules to get past it,” he said.
Mr Jessop said the party’s plans to use non-dom changes to fund specific policies was a “hostage to other people’s fortunes”.
“It’s dangerous because you might not get in all the money you expect, you might not get any at all.”
We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info
A Labour source insisted shadow chancellor Rachel Reeves has repeatedly made it clear fiscal rules are “non negotiable”.
The insider insisted the non-dom policy is based on academic research so “we do know how much it would raise”.
“The money has been allocated towards tackling the backlog and providing breakfast clubs,” the source added.
Source: Read Full Article