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Finally, we can talk about tax

Published 02 October 2000

Through this year's Labour Party conference, there ran a sense of mystery and grievance. Why, delegates and ministers wanted to know, had the public so suddenly turned against them? Why did the voters not understand that only further taxes could finance the improvements in health and education they seemed to demand? Could they not see a contradiction in the simultaneous clamour for higher pensions and lower petrol duty, or between their supposed concern for the environment and their determination to continue driving cars?

But there should be no mystery at all. The British invariably punish governments that fail to maintain the normal things of daily life. This was most evident in the 1970s, when Edward Heath recklessly called an election while the country was working a three-day week and suffering power cuts, and when James Callaghan went to the polls fresh from rubbish piled in the streets. But it was true also in the 1920s (the Conservatives lost the election after the General Strike), the 1940s (Attlee's government had frequent difficulties with fuel and power supplies) and in the 1990s, when the ERM debacle caused mortgage rates to fluctuate almost hour by hour.

Politicians fail to understand the importance of such events, because they imagine that policies and political issues are discussed daily in homes up and down the land with the same intensity as they are at Westminster. But most people do not think about the government from one week to the next. Nor, to use a metaphor popular in American PR handbooks, are they interested in ministers' problems in the kitchen; they want their hamburgers hot and spicy.

The bigger mystery is why this government, uniquely in the postwar era, has maintained a commanding lead in the opinion polls for so long. After all, when the Labour conference met last year, an ICM poll had just revealed not only that more than half the voters thought the government had failed to deliver on the NHS, but that more than 40 per cent thought it had broken its promises to improve state schools and reduce poverty. None of this affected voting intentions or even the personal popularity of the Prime Minister and most of his colleagues. People were happy with low inflation, falling unemployment, low mortgage rates and rising wages. Now, they have had to queue for petrol. They are not so happy. There is no more to it than that. With only moderate luck, all will be forgotten by the next election. But severe, if momentary, punishment was certain.

The blessing is that ministers have been compelled to go beyond their usual bland generalisations and define more closely their long-term mission and who is supposed to benefit from it. If petrol is to disappear from pumps and bread from supermarket shelves, people need at least to be given plausible reasons why they should put up with such disruption. This will not be easy for new Labour. It is trying hastily to invent a language that re-admits all the taboo words of the past six years: redistribution, equality, taxation, spending on public services, even solidarity. Tony Blair now tells us that "there are choices to be made". But the subliminal message of new Labour has always been that no choices are necessary; that we can have a caring, compassionate society, and strong public services, without anybody making significant sacrifices; that a centre-left government can admit into its tent big business as well as unions, the Daily Mail as well as the Mirror.

Gordon Brown is right to call for a great debate on taxation. Yet since 1992, and the electoral disaster of John Smith's shadow budget, this set of choices, above all others, is the one that Labour has dodged. Long-forgotten questions need to be revived. The Tories achieved a decisive shift from taxes on income to taxes on sales. Should that be at least partially reversed? This is the implication of the fuss about petrol prices, in which people have suddenly remembered that sales taxes hurt the poor more than a progressive income tax does. The Tories placed a ceiling on national insurance contributions, so that people on low wages pay a far higher percentage of their income in such contributions than people on high wages. Should the ceiling now be raised? That would seem the logical corollary of the demand for a basic pension rise that goes to rich and poor alike. Should Labour think about a new inheritance tax, which would modify one of the biggest and most unjust sources of inequality? Such questions have been off the agenda for eight years. But if Mr Blair's promise of a second term more radical than the first is to make any sense at all, they must be answered very soon.

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