It’s not about top tax rate

If you still think conservatism has a chance of ever becoming a political force again, just read the reports of the on-going Tory conference – and then extrapolate them to your own country if it isn’t Britain.

The conference is in an uproar. Delegates are trying to outshout one another with their scurrilous invective against Kwasi Kwarteng’s quasi-conservative budget.

Dozens of Tory MPs have announced they’d vote with Labour to defeat the plan of scrapping the top rate of 45 per cent for the fat cats making over £150,000 a year. Even the supposedly conservative papers describe the measure as benefiting only the “super-rich”.

That lumps together the billionaire Richard Branson and anyone making a decent middle-class income, a legerdemain one doesn’t normally expect this side of a communist cell. (For the record, a mortgaged Londoner on, say, £170,000 a year would find it hard to send two children to a good public school, and may even struggle with one – something anyone middle class could do without much trouble in the previous generation.)

Evidently the requisite hatred of the upper classes is now aiming downwards in search of targets. That’s good knockabout fun, but not of the kind that used to be associated with the Tories. Let me tell you, those tempora do mutantur, and always for the worse.

As for Labour MPs and their house-trained press, they are positively frothing at the mouth. As a measure of their skill at corrupting the public, Labour has jumped 33 per cent ahead of the Tories in the polls. If the elections were held today, the Conservative Party would have three MPs, and neither Miss Truss nor Mr Kwarteng would be among them.

The Tory rebellion was led by former cabinet minister Michael “Mike the Knife” Gove, who can’t see a dagger without wishing to stick it into the back of any Tory who dares put forth Tory policies. Now his wife has left him (allegedly over his affair with another man), Gove can concentrate all his boundless energy on obliterating any distinctions between the two main parties.

Chris Philp, Kwarteng’s deputy, who just two days ago was effusive about the policy, is now trying to exculpate himself, along the lines of “It ain’t me, Guv’nor, it’s Kwasi what done it.” Another senior Tory, Grant Shapps, has pirouetted even more daringly. An enthusiastic champion of the cut before the conference, he now describes it as “politically tin-eared”.

Faced with such a barrage, Truss and Kwarteng issued a grovelling apology and swore to keep the top rate intact. However, if they hoped to quell the rebellion by making that concession, their reading of modern life is borderline illiterate.

Gove has already said he’ll vote against any budget that includes even a marginal reduction in benefits. And another former minister, Esther McVey, has demanded that benefits go up in line with inflation.

Ay, there’s the rub, as Shakespeare would comment if he were still with us. It’s not about the top tax rate. It’s about the perceived attack on the status quo of the welfare state.

Those of you who read my comments on the Truss-Kwarteng tax-cutting budget a few days ago know that I have severe misgivings. Not about cutting taxes, mind you: if it were up to me, I’d cut them by half.

It’s just that tax-cutting doesn’t work without a parallel reduction in public spending. And funding it by increased borrowing is like treating a running nose with an injection of the Covid virus – especially at a time when both interest and inflation rates are shooting up.

I know it; David Stockman, who tried that sort of thing under Reagan, knows it – and I bet Truss and Kwarteng know it. The latter has a PhD in economic history, and he must have gone over Reaganomics with a fine-toothed comb.

The general tenor of their pronouncements, if not yet the content of all their policies, suggests that Truss and Kwarteng have in their sights not just the taxes, which they want to make lower and flatter. They want to shake, if not necessarily bring down, the whole rickety structure of the welfare state.

I suspect, though can’t prove, that their plan was to lower taxes first and suffer the ensuing economic and political pain for a while. Then they would tell the country that, though they personally were committed to “levelling up” (driving welfare commitments up to a suicidal level), that’s not how the chips had fallen.

Much as it makes their hearts bleed to complete exsanguination, they now have to lower benefits, reduce the NHS budget and in general bring down the aforementioned rickety structure or at least truncate it at the top. Fait accompli, chaps — or sorted, in more democratic language.

If that was their cunning plot, their fellow MPs have seen right through it with the precision of an MRI scanner. Redundancy notes floating before their mind’s eye, they jumped on the PM and Chancellor like so many dogs baiting a bear. Except that in this case the bear himself is more canine than ursine.

They realise something that must have escaped Truss and Kwarteng. The ship of economic status quo has sailed and it’s unstoppably running aground full speed ahead, with the zeitgeist bulging its sails.

In the 2020s neither Liz Truss nor anyone else can get away with what Margaret Thatcher got away with in the 1980s. In the intervening decades the project of corrupting the British public has been completed – with similar developments equally rife on the Continent, or even more so.

Had Truss and Kwarteng been a bit less ham-fisted, they could have made some gradual gains by stealth. But with the general election less than two years away, they had no time for stealth. They had to show their hand straight away, only to have it bitten off by their ‘Tory’ colleagues.

All this vindicates my recurrent lament. Conservatism of any kind, including economic, is dead, and nothing short of a catastrophe (military or economic) could help it do a Phoenix. Or perhaps not even that.

6 thoughts on “It’s not about top tax rate”

  1. I fear it is the same on this side of the Atlantic. However few of the electorate or government officials actually understand simple economics, that is now no longer even the point. Those who have ever received any benefits from the government expect them to continue indefinitely and increase ever more frequently. The point of taxation now is just to make a point: it is our money, we can take as much as we want. No government tries to work within a budget – the income is irrelevant. If they need more they’ll just borrow from the Chinese. If you disagree with that method you’re just racist!

    I cannot recall a candidate running on a platform of lower taxes since Reagan. But then, I rarely pay attention to their idiotic rhetoric. None of them have my best interests at heart. That much I do know.

  2. ‘Stockman’- there’s an aptronym for you!

    Speaking on the podcast ‘Chopper’s Politics’ Peter Mandelson recently assured the British public that it is once again safe to vote for Labour. We need to give the Conservatives a rest.

    1. David Stockman [not really a politician] was just about the only person in politics I would ever listen to. He at least understood the most simple basics.

  3. The IMF complained that the admirable Mr Kwarteng’s tax reforms would “likely increase inequality”.

    Those of us who genuinely care about the poor could have upgraded “likely” to “certainly” and been even more delighted, because once the rich start getting richer, the poor have a good opportunity to start getting richer too.

    But of course, socialists don’t genuinely care about the poor, and neither, evidently, do the IMF.

    So in countries where the IMF intervenes, the poor are pretty well f**ked (as they say in the Athenaeum), aren’t they?

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