Why don’t mainstream politicians ever learn? If you over-promise and under-deliver, it will fuel cynicism, driving voters into the arms of populists.
It is in the area of tax that Starmer’s government has got itself in the greatest mess. Frightened into saying Labour will not raise core taxes during the general election campaign, it is now stuck. Ministers cannot or feel they cannot break election pledges of not increasing income tax, VAT, or employees’ national insurance. As the economy fails to boom, partly undermined by taxes on business (confused message here – growth versus employers’ national insurance increase which inhibits growth), the government now has a potential new black hole of £20 billion in its finances.
Time for Starmer and Reeves to level with the public…
Yet Labour backbenchers will not stomach a cut of even £5 billion to the bottom line of bloated welfare expenditure. The NHS gobbles up vast amounts of new funding, defence expenditure will rise to 3.5% of GDP and £100 billion is promised on long-term capital expenditure.
What is to give? More tax on business will send the economy into recession and wealth taxes, after the disastrous policy of tightening up non-dom eligibility to pay UK inheritance taxes on worldwide assets (who thought of that one?), will simply lead to a further flight of capital which is wholly at odds with a ‘growth’ economy.
Meanwhile, Labour’s closest rival, Reform, is happy to splash out an extra £100 billion on law and order, scrapping the two-child limit on benefit payments, reinstating the winter fuel allowance in full, introducing a more generous transferable marriage tax allowance and increasing the income tax personal allowance to £20,000 a year. All this will be offset by scrapping HS2 and scrapping net zero policies. Umm… not an ounce of detail provided.
The reason Reform is getting away with it is Labour is in power, not them and Farage has yet to be subject to any close scrutiny. Populism is simply too popular to be disbelieved in the face of conventional politicians evading the truth.
What is to be done? Labour needs to have an honest dialogue with the electorate about the incompatible priorities of not increasing taxes yet promising improved public services, let alone a larger defence budget to keep us safe. It should outline genuine tax and spend tax dilemmas and take the pain of unpopular policies today to really succeed in delivering what the electorate wants tomorrow. You cannot have your cake and eat it. The electorate need to know this.
So, cut red tape on business and planning, cull the bloated civil service, reform welfare, reverse one of the Tories’ employees’ national insurance cuts and reduce upper rate tax relief on pension contributions. And while doing this plan for an ever closer relationship with the EU, making it clear Brexit is one of the reasons for the UK being in such a mess.
Much of this will be dreadfully unpopular but Labour then has four years to unpick Reform’s impossible plans which will come under greater scrutiny the closer it gets to power and prove steady competence from moderates in the medium-term works.
The electorate will hopefully understand there are no easy solutions to the dissatisfaction and cynicism they feel today if the government levels with them. And telling the truth without platitudes may even have the added advantage of pricking populism’s bubble before it is too late.
Who would believe it…?
Inside Right Politics 