Taxes will need to rise unless Labour embraces radical reform of public services and promotes AI, Sir Tony Blair will warn.
Labour’s most electorally successful leader will tell Sir Keir Starmer that traditional routes of boosting growth will no longer be enough as Britain’s population becomes older and sicker in the years ahead.
Warning that Britain will become “much poorer” without dramatic productivity improvements, Blair will call on the new government to use emerging technologies to automate swaths of the public sector and allow the NHS to scour medical records to seek out those who need pre-emptive treatment.
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Wes Streeting, the new health secretary, and Pat McFadden, the Cabinet Office minister charged with overhauling government, both leading Blairites, will be among the star guests at the annual conference organised by the Tony Blair Institute (TBI).
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While Blair has lavished praise on Starmer, he will challenge the new prime minister to go significantly further in his plans for public service reform and economic growth, as his think tank warns that radical measures are needed to avoid tax rises.
“Britain is facing an unenviable triple whammy of high taxes, heavy debt and poor outcomes. And worse is to come with the demographics of an ageing population against us, deep structural health problems and rising numbers of long-term sick,” he will say.
“The simple and unavoidable truth is that unless we improve growth and productivity, and drive value and efficiency through our public spending, we’re going to become poorer. Much poorer.”
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Starmer has faced repeated questions about how he can promise “no return to austerity” while also ruling out raising the three main taxes. Analysis by the TBI warns: “Without a change in approach, taxes would need to rise by about 2 per cent of GDP by the end of this parliament, 3 per cent by the end of the next parliament and 4.5 per cent by 2040 just to stabilise debt.”
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The freezing of income tax thresholds is expected to raise the tax burden by about 1 per cent over the parliament, but the TBI warns a further hike in the tax of one percentage point is needed to avoid spending cuts, with even bigger rises likely in the decade ahead to pay for an ageing population — even to keep public services at current levels.
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Starmer has insisted that growth will square the circle but Blair argues that “conventional policy” will not be enough to boost the economy to the extent required. Blair will say that “stable government and some clear early wins can definitely help”, adding: “But there is only one game-changer: harnessing effectively the 21st-century technological revolution.”
Arguing that a looming technological revolution means “there has never been a better time to govern”, Blair will say: “Things which were impossible will become possible; advances which would have taken decades will happen in a few years or even months; the value we can add, the improvements in efficiency we can make, the radical benefits in outcomes we can secure, could be truly revolutionary.”
