WWhen a British politician discusses “difficult decisions,” they often reveal their true allegiance. These tough choices typically involve burdening the less fortunate or cutting vital services that ordinary citizens rely on. For example, when the Labour party decided to keep the Tories’ two-child benefit cap, which pushes hundreds of thousands of children into poverty, they presented it as a tough decision. However, when it comes to raising taxes on the wealthy, the same level of difficulty is not attributed, even though such a commitment always sparks hysteria from Tory politicians, rightwing media outlets, and the wealthy. Refusing to raise taxes on the wealthy is actually the easy way out and is the opposite of a tough decision.
Rachel Reeves, Labour’s shadow chancellor, further highlights the opposition’s political cowardice by ruling out a wealth tax or any means of asking the well-to-do for a greater contribution. Labour has been seeking the support of big business, avoiding any offense towards them. It’s not just a rejection of Corbynism that Labour’s leaders seek, but they also believe the party lost in 2015 because it wasn’t subservient enough to corporate Britain. However, evidence from polling at that time showed that 42% of voters considered the party too soft on big business, while only 22% viewed it as too tough. Nevertheless, Labour prioritizes appeasing the powerful over all other considerations.
For those concerned about the consequences of 13 years of disastrous Tory rule, this should be alarming. Reeves dismisses the need for a wealth tax by claiming that there are no spending plans requiring £12 billion. Any politician claiming to fix a country facing multiple crises without significant investment is being dishonest with the public. From overwhelmed NHS waiting lists and declining living standards to crumbling infrastructure and a worsening housing crisis, resolving these issues will require substantial levels of investment.
Instead, Labour relies on the idea of achieving the highest sustained economic growth in the G7, akin to a magic fairy. While it is a worthy goal, how would Labour actually achieve it? Since the advent of Thatcherism, the UK has experienced weak growth distributed unequally.
Escaping this era of stagnation demands a new economic model, which is not forthcoming from Starmerism. Despite Keir Starmer mocking trickle-down economics, promising to raise living standards through economic growth without meaningful redistribution is no different. Economist Jim O’Neill, who has advised Reeves, has called for politicians to abandon arbitrary fiscal rules and emphasizes the need for stronger investment, spending, and productivity growth to improve the UK’s economic performance.
Though the New Labour period had its failures, it successfully rebuilt public services and reduced poverty by investing significant amounts of money. While the party initially adhered to Tory spending limits for two years, it ultimately made impressive investments. Today’s Labour party shows no commitment to such actions. By rejecting a wealth tax and stating no intention to increase the top rate of income tax or capital gains, a Labour government would have little room to maneuver while in office.
During his leadership campaign, Starmer promised to increase taxes on the rich, a key part of his “10 pledges.” His subsequent U-turns cannot be justified by changed circumstances. The case for raising substantial revenue is even stronger now than it was in 2020. Claims that Tory economic mismanagement limits Labour’s options are simply echoing George Osborne’s justification for austerity after the financial crash. Britain’s tax revenues are significantly lower compared to more successful economies, and the wealthy are wealthier than ever. Additionally, the tax burden will only increase due to factors such as an aging population and the climate emergency. Should struggling Britons bear this burden, or should it fall on those who can afford it?
Three years ago, the Wealth Tax Commission proposed a one-off wealth tax after consulting economists, legal experts, and tax advisers. They concluded that a 5% tax on individual wealth above £500,000 could generate a staggering £260 billion. The tax would only be levied after accounting for mortgages and other debts, and it would be paid in instalments over five years.
A truly bold Labour party dedicated to rebuilding society would embrace such a plan. However, Starmer’s reliance on a scaled-back green transition plan funded by borrowing is insufficient. His government risks embodying Blairism without the necessary investment or standout policies like the minimum wage. This would be a bleak offering in good times, let alone in a country suffering from social turmoil.
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