Tax rises are no longer taboo in the UK. The party that grasps this could reap huge rewards | Tax and spending

Join Hafta-Ichi to Research the article “Tax rises are no longer taboo in the UK. The party that grasps this could reap huge rewards | Tax and spending”

For the first five years of the 2010s, the deficit seemed to be on everyone’s lips. A belief in the need to control spending carried the Conservatives through two general elections. But by the time I started conducting focus groups in 2016, the deficit or the debt were barely mentioned. So salient in the David Cameron years, it had all but disappeared from the public’s mind as attention turned to Brexit.

You would not know it from Westminster, but once more that picture is changing. Though the public were and are hugely supportive of Rishi Sunak’s furlough scheme, there was a ripple of concern detectable in focus groups at the time about the eventual need to “pay it back”. That has since developed into a firmer view, brought up unprompted, that though coronavirus support is needed for now, “we cannot keep borrowing for ever”, that the country will need to get on top of this debt, and an acknowledgment that there will be tough times ahead as we do so. This applies just as much in the “red wall” seats of the north of England and the Midlands as elsewhere.

The quality of economic responsibility – closely wedded to the careful management of the public finances – is a key demand from voters, and one of the main measures they will use to weigh up their choice at the next election. For Labour, this is important because the economy is their number one weakness; voters still worry that it would be “just like last time” if they were elected again, and concerns about their handling of the economy is the top hesitation about voting for the party in the red wall. For the Conservatives, it is important because – in the absence of Brexit and Corbyn, so key to turning votes blue in 2019 – they need the clear dividing line with Labour that the economy provides.

But parties should not assume this shift in the public mood is a wholesale return to the early 2010s. The means by which people want their political leaders to be economically responsible has shifted. In December 2009, a YouGov poll showed that 52% of people preferred spending cuts to tackle the deficit over tax rises, with the latter being the choice of 30%. In 2020, the picture has reversed: only 27% opted for spending cuts, 47% for tax rises. This trend is true for both Labour and Conservative voters, as a poll for Ipsos Mori also shows.

Polling now shows support for changes to capital gains tax, and an increase to corporation tax. More people than not want to see taxes increase on online retailers, who they feel have avoided paying their fair share for years – they have supplanted the banks as the business bogeyman of the British people. And, increasingly, people are open to paying more tax themselves. In a recent focus group I ran, seven of the eight respondents said they would do so if ring-fenced for the NHS, as a way of “paying back in” after the pandemic. Asking people how much they would be willing to pay on a weekly or monthly basis shows people are more relaxed about the prospect than for a long time.

There is a difference between permission for tax rises and a public clamouring to have more of their money taken by the state. No party is going to be punished for not raising tax. Some taxes remain unpopular whatever – a VAT rise, for example, is only the top choice of 4% of voters.

But for the main parties, it does present a new political opportunity. If changes to taxation were framed as part of people’s contribution to a national effort as we rebuild from the pandemic, or as an act of paying back to our NHS, there is the potential for a powerful new narrative tapping into this new public consensus – a desire to tackle the debt, but through fair tax rises rather than reduced spending.

Some Tories get this, with talk of windfall taxes and the chancellor’s message on the need to be fiscally responsible. But there is nervousness about embracing it, particularly among a pack of Conservative MPs hostile towards any change. Oddly enough, Labour is even further away, attacking a version of the Conservative party that stopped existing quite some time ago over austerity, and opposing tax rises – even the corporation tax rise said to be a key part of Rishi Sunak’s upcoming budget. If Labour does go ahead and set itself up in opposition to this measure next week, it risks letting the Conservatives walk away with the spoils, able to further project themselves as the party of the workers. Starmer’s calculation on tax seems based on a dated perception of the voter Labour needs to win – more Tony Blair’s southern “Mondeo man” than the working-class, traditionally Labour voter in the north and the Midlands. Imagine if Starmer stood up last week and said he wanted to see a general tax rise (with a higher rate for higher earners) to fund a pay boost for our beleaguered NHS staff, challenging the Conservatives to do the same. You do not need to be well-versed in public opinion to know that would have created a bigger impression than a policy about bond markets.

Of course, tax can go wrong. The chancellor will need to tread carefully. Anything that felt unfair while working people were having to pay more, such as lifting the bankers’ bonus cap, could unwind support for the whole thing and poison the Conservative brand with voters who are still nervous about what they did with their ballots in December 2019. If there is a tax rise, including, say, the freezing of the personal allowance, there will need to be a counter-balance – such as a higher rate for higher earners, or higher tax on big business – that is framed as part of the same package.

But, navigated correctly, there is a new consensus up for grabs, quietly hidden among the voters. It may just be that the real victor of British politics is the person or party that takes the opportunity to grasp it, defining and differentiating themselves as they do so. Johnson, Starmer, Sunak, Dodds: are any of them brave enough?

• James Johnson is a former Downing Street pollster who worked under Theresa May and now runs JL Partners

Hafta Ichi
Source: The Guardian
Keyword: Tax rises are no longer taboo in the UK. The party that grasps this could reap huge rewards | Tax and spending

Leave a Comment

Your email address will not be published. Required fields are marked *