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The curse of the U-turn has struck again. Read on to find out how fairness forced the frontbench to fold.
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The lady’s now for turning
Kwasi Kwarteng has just announced a U-turn on the government’s plans to scrap the 45p top rate of income tax - a move which would have cost the Treasury £6bn per year, while benefiting the richest in society.
Experts at the University of Warwick calculated that the move would have given £1bn in tax savings to just 2,500 people, each with over £3.5m in income, representing an average annual tax saving of £400k for each of them.
As these experts argued, this unexpected tax bung wouldn’t have achieved its objectives of reducing avoidance, bringing people to the UK, or making people work harder.
But the reason for the U-turn was that almost everyone agreed that, in the broader economic context, it was unacceptably, howlingly, outrageously unfair.
Liz Truss has spent the last two weeks saying that she won’t change course, that any short-term pain is necessary, that she is prepared to be unpopular. But now she knows that you can’t lead a country or a party if you completely turn your back on fairness.
The U-turn seems to have come about following interventions from Michael Gove and Grant Shapps, who decried both the substance and the optics of the policy. Gove said that the plan was “a display of the wrong values". Shapps said in the Times today that “this is not the time to be making big giveaways to those who need them least” because “when pain is around, pain must be shared”. Other big hitters like Damien Green and Robert Buckland made similar points, arguing that the plans were morally wrong, economically illiterate and politically suicidal.
These points were echoed on this morning’s Today programme on BBC Radio 4. Host Nick Robinson suggested that “fairness is the spectre at this political feast” (the Tory conference). (Lord) David Willetts, former Conservative MP and President of the Resolution Foundation’s Advisory Council, agreed, echoing Grant Shapps by arguing that “there has to be a sense of shared sacrifice and shared benefits”, and that “the world’s most successful economies… have a fairer distribution of income as well; there is not a trade-off”. He also said that any future public expenditure reductions “have to pass the same fairness test as [the Chancellor] has just applied to the tax package”.
Levelling Up Secretary Simon Clarke’s comments on Saturday that government departments would have to “trim the fat” suggest that this is going to be a long and drawn-out battle, especially now that the Labour Party is very explicitly making the case for fairness as an underlying principle of its approach to policy (as per Keir Starmer’s conference speech in Liverpool last week).
And it’s not just that the government wouldn’t have had enough parliamentary support to get the top rate tax cut through the Commons. The underlying issue, needless to say, is the extent of outrage among voters. The gap between Labour and the Conservatives in the polls has widened to a level not seen in almost 30 years.
This is partly, as John Burn-Murdoch argued in the FT last week, because the Conservatives “have become unmoored from the British people”. They “may have adopted the most extreme economic position of any major party in the developed world”, becoming even more right-wing than Trump’s Republicans and Bolsonaro’s Social Liberals, and hugely more right-wing than the average British voter (scoring 9.4 out of a possible 10 points for right-wing economic values, compared to 3.1 for the average voter and 4.2 for the average Tory voter).
As it happens, we’ll be publishing some polling as part of the Fairness Index on 19 October showing how people’s perceptions about the extent of fairness in the UK change when shown some of the facts about levels of inequality. Sign up here to join the launch webinar!
Quiz of the week
Which handy phrase entered the lexicon last week thanks to Liz Truss?
I have no responsibility for the economy that you mention I dispute the inequality of your invention I resent the accuracy of your intervention I protest the negativity of your reaction I do not retract the ideology of oppression I do not accept the premise of your question I deflect the meaning of your suggestion
Reads of the week
“It is impossible to understand the ideological zeal with which Truss and Kwarteng are pushing Britain towards the economic brink without understanding… a deep-rooted network of ideas, institutions and thinkers born on the shores of Lake Geneva over 75 years ago.” Jeremy Cliffe writes in the New Statesman about the free-market thinkers and ideas behind the most radical economic experiment in Britain for 40 years.
“Struggling families will not forgive a chancellor who comes to them for efficiency savings when their cupboards are already bare.” Alison Garnham of the Child Poverty Action Group joins other campaigners in saying that tax cuts funded on the backs of the poor are ‘morally indefensible’.
“A colonial-era tax perk allows some UK residents to go untaxed on overseas investments, just by declaring that their permanent home is abroad”. Arun Advani, David Burgherr and Andy Summers at the University of Warwick argue that taxing non-doms fairly would raise billions.
“Increasing numbers of nurses and other staff, particularly in the lower pay bands, are finding they are unable to afford to work in the NHS.” Miriam Deakin at NHS Providers talks about survey data showing that NHS nurses are not eating at work in order to feed their children.
Fairness Foundation updates
Essay published in a book by the Tribune group of Labour MPs
I’ve written a short piece about how defining and communicating fairness well can build support for change, for a book with contributions from Gordon Brown, Kate Pickett and Richard Wilkinson, Will Hutton, Torsten Bell and Miatta Fahnbulleh. The book is available as a PDF on the Tribune website.
Piloting a ‘microcast’ audio version of Fair Comment
We’re testing the viability of producing a five-minute ‘microcast’ (mini-podcast) based on Fair Comment, every Thursday. Please have a listen and let you know what you think. Is it interesting? What could we do differently? Please contact us to share your feedback. Thank you!
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