Reductio ad Stalinum

Boris compares the 50p tax with Stalin's campaign against the kulaks

Boris Johnson writes today: "[T]he 50p tax is not far, in its political motive, from Stalin's assault on the kulaks."

I'm used to right-wingers trotting out the cliché that Labour wants to "tax the rich until the pips squeak" (never actually said by Denis Healey), but I hadn't anticipated a comparison with the man who pledged to "liquidate the kulaks as a class".

Johnson isn't the first Telegraph columnist to make such an inappropriate comparison. Last week Janet Daley absurdly compared the EU with the Warsaw Pact.

As in the case of its better-known cousin, reductio ad Hitlerum, there should be an informal moratorium on this sort of thing.

Johnson's remarks will delight Tory activists, many of whom loathe the new tax, but they once more put him at odds with David Cameron and George Osborne, who have insisted that everyone must pay their "fair share". Osborne has even defended the 50p rate on the grounds that it will help foster a "more equal society".

This isn't the first time that Johnson has used his Telegraph column to criticise the tax. There is perhaps no other issue on which he writes and speaks with such fervour. Should he continue in his role as unofficial spokesman for the grass-roots campaign against the tax, this could become dangerous for Cameron.


Sign up to the New Statesman newsletter and receive weekly updates from the team

George Eaton is political editor of the New Statesman.

Photo: Getty Images
Show Hide image

Autumn Statement 2015: How we got here

The story of Britain's finances in six charts. 

Today George Osborne did two things. He gave give his annual ‘Autumn Statement’, in which he’ll detailed how his estimates for growth, debt and the deficit have changed since the Budget in July, and he laid out the Spending Review, which detailed exactly how much government departments will spend over the parliament.

We’ll have coverage of today’s decisions shortly, but first, how did we get here? After five years of austerity, why is the government still cutting so much?

As we all know, in 2008 the party stopped. In the same way that the Paris attacks are a product of 9/11, today’s Spending Review can trace its origins to the fateful crash of the global financial system seven years ago.

So let’s return to 2008 and remember that government debt is any Chancellor’s greatest fear. If your debt gets too high you will become bankrupt: global markets will not lend you the money you need to keep running your government.

For 15 years, from 1993 to 2008, government debt was not a great worry. Gordon Brown was able to spend his decade as Chancellor doling out the fat of the land. Debt never rose high than 41 per cent of GDP, and was only 37 per cent in spring 2008, not much higher than it had been in 1993.

Then the financial crisis happened.


In seven years the government’s debt has doubled, from 41 to 80 per cent. The Tories spent five years very successfully blaming the last Labour government for causing this spike by overspending from 1997-2008, but, as this chart suggests, the greatest cause was the global crisis, not Labour profligacy.

Regardless of who was responsible, the debt is now at a historic high. If we rewind our chart back to 1975 we can see that today’s debt levels are even higher than those Thatcher railed against in the 1980s, when she, like today’s Tories, also cut spending heavily upon entering office.

But while she succeeded in wrestling the debt down, Osborne failed in his first term. In his 2010 budget he promised to reduce the budget deficit by 2015. After five years of austerity, the debt was going to start falling. But that hasn’t happened.

But while Thatcher succeeded in wrestling the debt down, Osborne failed in his first term. In his 2010 budget he promised to reduce the budget deficit by 2015. After five years of austerity, the debt was going to start falling. But that hasn’t happened.

So now the UK must endure another five years of cuts if we are to run the surplus Osborne is targeting and which he recommitted himself to today. If we don’t run a surplus our debt levels will continue to slowly creep up towards 100 per cent of our GDP.

According to Eurostat, who measure things slightly different to the Office of National Statistics, our debt is close to 90 per cent and is among the highest in Europe. 

We are still just below the level of the PIGS (Portugal, Italy, Greece and Spain), those countries whose debts ballooned after the financial crisis and who have gone through a succession of governments as austerity has been imposed by international markets.

But most of those countries have now started to cut spending severely, as for instance in Greece, whereas the UK is still running a relatively high budget deficit (nearly 6 per cent of GDP according to Eurostat). If we continue to do so we will keep adding to our debt, and could approach the level at which markets will no longer lend to us.

That, at least, is the Tories’ line of argument. So we are set for another five years of cuts. And everything is also dependent on growth. The figures I’ve quoted for debt and the deficit are all expressed as a percentage of GDP. A country’s total levels of debt don’t matter; what matters is how great they are compared to the size of your economy.

The cuts Osborne announced today will only succeed in cutting the deficit if growth is as high as he hopes it will be (as Paul Johnson of the IFS pointed out on the Today programme this morning).

How likely is that? Well, the estimates he gave in 2010 seemed over-optimistic in 2012, when the economy was flat-lining and Osborne was at his political nadir, but eventually seemed just in 2014, when the economy recovered.

Osborne’s political future will thrive or dive depending on growth over the next five years. Many economists have argued, including Robert Skidelsky and Simon Wren-Lewis in these pages, that Osborne’s focus on austerity in 2010 caused growth to stall in 2012. If he continues to cut, growth could stall yet again in 2017 or 2018.

The cuts over the next five years are going to be more severe than those from 2010-2015, and are greater than those any other major economy is planning. If they cripple growth, Osborne’s plan will need readjusting once again if both he and the UK are to survive. 

Harry Lambert was the editor of May2015, the New Statesman's election website.