It’s great to see Philip Collins back in the Times: you may agree or disagree with him as a columnist but his writing is always elegant and thought-provoking. Today’s column looks at the conundrum facing Keir Starmer. ‘In all honesty I don’t think anyone involved can really say they know what it means to be a Labour government in a time in which there is no money left,’ he says. I know what he means: Tony Blair turned on the spending taps and Gordon Brown, when in power, turned them on even more. But Starmer will have more money to spend – far more – than any Labour government in history.

The tax take as a share of GDP is already at a 75-year high and state spending 20 per cent more than it was at the end of Gordon Brown’s day. And that is after adjusting for inflation. Here’s the story: tax and spending inflation-adjusted for today’s currency.

Labour’s problem is that it would inherit not a deficit of money – just look at those blue lines – but the red lines. All consequences of big-government Conservatism.

So the issue is not that there is no money coming in. The issue is that so much of it is being spent on debt interest, on welfare and a government machine that has grown out of all proportion to its usefulness. In many ways, it’s inflicting active harm to the economy. Last week, it emerged that there are 5.4 million working-age people on out-of-work benefits or 12 per cent of the working-age population. This in the middle of a worker shortage.

This is a shocking waste of human talent, let alone taxpayers’ money – but to remedy it Labour would have to do some politically tricky tough-love welfare reforms. If it chooses not to bite that particular political bullet, it will end up with an even bigger welfare bill. The DWP forecasts are below. The below chart shows the ghost of Christmas future for an unreformed welfare state.

Starmer can hardly tax more, given that Sunak has just raised taxes to a level higher than anything Dennis Healey ever dared in the 1970s. Sunak’s corporation tax rises were enacted in the hope that this would impress the markets who would demand less debt interest. But that has not quite worked out. UK gilt yields are now higher than under Liz Truss, two-year and five-year mortgage rates on offer are 6.8 and 6.2 per cent respectively. The UK is being charged more interest on its debt than even Italy, now having to pay more than any G7 country. So there isn’t much room to borrow, either.

Collins is quite right to say that Labour will struggle to spend its way out of problems next time. But there’s no end of money. It’s not enough because Starmer will inherit a spending crisis and will have to reform spending (welfare included). But when David Cameron did this, Labour referred to spending reform as ‘austerity’. Unless the gilt markets offer sudden windfall of cheap debt (as happened to Cameron) Starmer and Rachel Reeves will face a choice: to find savings in this gargantuan government machine, or continue in the high-tax, low-growth trap bequeathed by years of Tory tax, borrow and spend.