Despite all the fanfare of national insurance cuts announced at this week’s Autumn Statement, the tax burden will continue rising. Even under a Conservative government pencilling in bonkers spending cuts after the next election, this remains the key truth of yesterday’s budget. Aside from Liz Truss’ doomed experiment, since 2019, the Tories have been responding to an undeniable reality: that taxes will have to rise to pay for increasing demands on public services.

At this year’s Labour conference, Keir Starmer acknowledged the scale of the crisis facing 'Broken Britain' - namely our creaking public services and a flatlining economy. Once in power, he said, Labour will need to combine all the lessons from their previous periods in government – from when they built a new Britain in the 1940s, modernised the economy in the 1960s and rebuilt public services in the 1990s. However, despite these historical references, the party is running on a mantra of reform, seeking to break from the notion that Labour is the party of tax and spend. But while the Labour leader and his Shadow Chancellor, Rachel Reeves, may not want to admit it yet, spending will have to rise over the next parliament just to maintain the status quo, let alone deliver the kind of transformation Starmer alludes to. CPP’s latest report – Funding Fair Growth - shows that just to maintain current levels of public services will cost around £142bn extra each year up to 2030 as pressures from an ageing society and wage growth push up costs of delivering healthcare and pensions. Ongoing global security threats will push up spending pressures even higher, as my colleague Tanya Singh has written about.

With the economy flatlining and interest rates on government debt at a twenty year high, it is not possible to borrow our way out of this. To do so at scale would be inflationary and damage the UK’s credibility with international markets and Labour are rightly steering well clear of anything that sounds like a leftish version of Trussism. It is inevitable then that taxes will have to rise, with our calculations suggesting that they would need to rise to 38.8% of GDP by 2030 to bring the anticipated budget deficit down to pre-pandemic levels, making our public finances broadly sustainable. While this would be the highest UK tax rate on record, many European countries already have higher tax burdens today yet still sustain more dynamic and productive economies. Plenty of other European countries have higher tax burdens while accommodating higher level of economic growth and investment.

Reform to public services will be important – but they will not solve the essential fiscal problem. For instance, there is much hope that AI and new technologies can support improvements in healthcare and it may be true that these will help support longer and perhaps healthier lives. But typically improvements in technology raise the cost of delivering healthcare – the Office for Budget Responsibility (OBR) has consistently shown technological change is the most important historic and predicted driver of rising healthcare costs. Historical data suggests that new drugs or scanners increase the demand for, and consumption, of healthcare. This doesn’t mean that it is not worth investing in new technologies to improve lives, but we are putting too much hope on it delivering big cost savings to the NHS.

If the tax burden has to rise, then it must be done in a fair and sustainable way. It is particularly unsustainable to keep asking the working age population to shoulder the burden of ever-rising taxes when it is declining in size relative to retirees. A sole focus on freezing income tax thresholds and National Insurance Contributions is not the answer. In this context, CPP’s funding fair growth report explores the taxation of wealth and we put several tax raising options to a Citizens’ Jury made up of 50 members of the public broadly representative of the wider population. Amongst this group there was strong support for both equalising the tax treatment of capital gains with the tax treatment of income from earnings and for a one-off tax on individuals with a net worth of over £1 million. While Labour has so far ruled out taxes on wealth, such taxes will have to play an increasing role in funding public services given our ageing society – and these are plausible options to start with. The alternative is to place an ever-increasing burden on workers to pay for a rapidly increasing older population who are the biggest consumers of public services, and many of whom have high levels of wealth relative to workers.

The next decade will be characterised by tax and spend, whichever political party is in charge. The sooner we get used to this idea, the sooner we can start debating the fairest route to raising the tax base over the medium term and building trust in government to do so.