Labour doesn’t know who ‘its people’ are

Good morning. What is a working person anyway? The Labour government has been struggling to answer that question since Keir Starmer said that the definition didn’t apply to anyone who owned assets. Now the line is that working people know who they are and don’t need to be told.

Labour’s difficulties in defining what, exactly, it means, by its repeated statement not to increase taxes “on working people” were not a complete surprise to the government. Behind the scenes, there has been a fierce argument about the need to retreat from that particular soundbite, because of course, in practice, in means absolutely nothing. All taxes are taxes on “working people” when you get right down to it.

Most wealthy retirees are actually living off the work they did earlier in their life. Even the most affluent and privileged person will, in some way or another, pass their taxes on to a “working person”.

That’s even before various sin taxes, such as duties on cigarettes and alcohol, which are paid by, you guessed it, working people!

What the Labour party really meant with its pledge was “we won’t touch the headline rates of income tax and national insurance, but we will find any number of other ways to increase the amount of money going into the public services”.

But the reason why cabinet ministers are struggling reflects a deeper uncertainty at the heart of our new government. Some thoughts on that below.

NI worries if not

Part of being a successful government is getting the other lot’s voters to pay for the things your voters want to do, whether that is through tax (the New Labour government of 1997 to 2010), unemployment (Margaret Thatcher) or cuts to public services (the Conservative administration just gone). Of course, that is harder if you have sluggish to no growth, because you have to either a) get the other lot’s voters to take still greater losses or b) start taking from your own.

Although it is not my favourite chart, in part because occasionally I lie awake at night worrying about it, this is, I think, the most important chart in British politics.

This is one half of the reason why Labour promised “no increase to national insurance, value added tax or income tax”, the other being deep-seated anxieties people have about the Labour party and tax. But the big problem with that pledge is that it means that the Budget tomorrow will feature a load of alternative ways of raising tax, all of which risk being more economically harmful than just a straightforward rise in one of the big revenue-raising taxes.

But the other problem is that the government is not clear in its own mind who “its people” are, because it lacks political direction of the kind only the prime minister can provide. Keir Starmer has a clear sense of what he wants to accomplish in some policy areas, not least the criminal justice system, and, as he proved in the election, he has a strong grasp on what he wants to do electorally. But he hasn’t yet provided his government with political direction, and it may be that he never does.

Now try this

(Stephen) This week, I have mostly been playing Persona 4 on the Nintendo Switch. It’s a delightful game — the best of the series in my view — a lovely tale of coming of age and friendship.

(Georgina) I recently added “Timeguessr” to my rotation of daily puzzles. It gives you a photo from history and you have to date it and place where in the world it was taken (click on “daily” for the challenge).

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