Britain’s right turn
Not a single tax rise announced in the Budget, a Treasury minister noted with pride to me this week, has unravelled. They had a point: when Rachel Reeves appeared before the Treasury Select Committee a few days ago, there was no equivalent of the harangue that George Osborne received over the “pasty tax” in 2012.
But there is a trend that should trouble Labour. Forty-five per cent of voters say that the UK taxes and spends too much – the highest level recorded since YouGov started asking this question in 2019 – compared with 20 per cent who say it taxes and spends too little and 11 per cent who say it has got the balance right.
Chart by YouGov
Public opinion tends to move in the opposite direction to government policy: under the Conservatives it becomes more sympathetic to higher spending; under Labour it becomes more sympathetic to lower taxes (a phenomenon pollsters describe as “thermostatic”). But after the largest tax rises in any parliament since the 1970s, this shift has happened faster than usual.
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A traditional left/right divide on the economy is one reason why a Conservative Party that appeared moribund is suddenly showing signs of life. In some polls the Tories have achieved crossover with Labour, while Kemi Badenoch’s rising approval rating is now close to those of Nigel Farage and Ed Davey. “Kemi has got her sass back,” declared one senior shadow cabinet minister of the Tory leader’s improving PMQs performances.
Labour’s defence of higher taxes is that they will ensure fiscal stability, enabling lower interest rates, and allow for the repair of the public realm. But the risk for Reeves is that we are seeing a repeat of the conditions that enabled the rise of Thatcherism in the 1970s: an unpopular Labour government viewed as irredeemably statist. As the Chancellor declares that she is “asking” voters to contribute more – a line that MPs say is going down badly on doorsteps – the danger is that they feel they are receiving too little in return.
And there’s an even bigger headache for the government: a lack of growth. New figures released this morning show that GDP shrank by 0.1 per cent in October, meaning that the economy has failed to grow on a monthly basis since June. “Before we even get to the question of tax, we’ve got to deal with the economy,” said Keir Starmer back in January 2024, declaring that the “first lever that we look for is the growth lever”. But too little growth has come, so Labour has been forced to tax.
To the right, Reform and the Tories will cry that a bloated Leviathan must be slain; to the left, the Greens will insist that “the 1 per cent” should pay. Starmer and Reeves, like so many of their European counterparts, risk being the unbeloved social democrats trapped in the middle.
This piece first appeared in the Morning Call newsletter; receive it every morning by subscribing on Substack here
[Further reading: Keir Starmer must control the conversation]
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