What Rachel Reeves is not telling us should alarm voters, says ALEX BRUMMER

By happenstance, I ran into a friend – a wealthy, life-long Labour supporter and donor – in the last few days.

In a brief exchange, he observed there was much to be fixed for the next government, in particular health and public services. Then came the stinger.

That could only happen if Labour raised taxes. Never mind that revenues, at 37.9 per cent of national output, are at record peacetime levels.

Now that Labour has reasserted its ballot-box superiority in municipal polls and the South Blackpool by-election, it will be hard to escape an intense focus on what a Keir Starmer and Rachel Reeves party will do in power.

Saint or sinner?: Shadow Chancellor Reeves has been intent on building a reputation for fiscal rectitude

Shadow Chancellor Reeves has been intent on building a reputation for fiscal rectitude.

She was key to thwarting Ed Miliband’s ambition to spend £28billion a year on a green revolution. On revenues, she has been content to twiddle the dials. Wealth taxes have been ruled out.

However, her campaign against people with non-domiciled tax status (a policy partly purloined by the Tories) and the attack on the charity status and VAT privileges of independent schools are precisely in that realm.

If there is a common theme around what she and Labour propose, it is about closing loopholes used by rich people and wealthy companies.

The intention to remove tax breaks for new investment in the North Sea falls into this category.

Bank interest windfalls, from deposits held at the Bank of England, might also be as soft target.

Knowing Reeves’ interest in what happens across the Atlantic, it would be surprising if she had failed to spot the comments of the IMF’s fiscal overlord Vitor Gaspar.

Speaking at the recent Spring meetings in Washington, he argued that closing loopholes might be the best approach for Western nations seeking to put their finances in order after the shocks of the pandemic and Russia’s Ukraine aggression.

History tells us that when new brooms arrive at the Treasury, there is always a black hole.

Labour’s former chief secretary Liam Byrne left a now legendary note in 2010 for his coalition successor David Laws saying: ‘There is no money. Good luck!’

In 1997, Gordon Brown inherited relatively benign public finances from Tory predecessor Ken Clark.

Brown came well prepared with secret tax plans to fund his worthy projects: a tax on privatised power utilities and a raid closing a perceived loophole which allowed UK pension funds effectively to receive dividends tax free.

Pre-election pledges and manifesto promises are as dust when the books are opened. Loopholes, a Reeves favourite, offer many opportunities for piling on the agony.

She already has identified £5billion to be collected from tax avoiders. The general belief is that this largely consists of the ‘fat cats’ who employ the finest advice.

Easy pickings: Pensions are easy pickings as both Gordon Brown and subsequent Chancellors discovered

The reality is that it is the self-employed person, sole trader or small business owner, struggling to make ends meet, and careless with record keeping, who is on the frontline.

Pensions are easy pickings as both Brown and subsequent Chancellors discovered. Generous tax reliefs, which benefit upper-income people more than those further down the scale, could be regarded as a loophole.

Treasury orthodoxy has long regarded such breaks with disdain. So removing tax relief from upper-income taxpayers or re-introducing the £1m ceiling on pension pots are obvious places to look.

Another tax riddled with loopholes is VAT. Last year the Institute for Fiscal Studies, a think-tank quoted with reverence by Labour politicians, argued that gaping chasms in the UK’s system (rather than loopholes) mean there is a £100billion pot of gold to be raided.

It is easier said than done as George Osborne found when he sought in 2012 to impose VAT on some ambient foods – the so called pasty tax.

We may pay VAT on plumbing installations but there are a whole range of financial services, one of the largest sectors of the economy, which escape the charge.

Reeves is sensibly silent on such ideas. But it is what she is not telling us, rather than public pronouncements, which should alarm hard pressed voters.