New Times,
New Thinking.

  1. Business
  2. Economics
15 February 2017

Theresa May is running out of pain-free ways to to keep her promises

The brewing row over rate rises is a sign of things to come. 

By Stephen Bush

Remember the mansion tax? Ed Miliband’s proposal to introduce a levy on homes with a value of more than £2m was the subject of considerable opposition from the right-wing press and a series of celebrities who feared they’d fall victim to the tax.

From the policy’s introduction in September 2013 to the general election, not a day went by without celebrities such as Myleene Klass, Sol Campbell and Tom Conti complaining about the consequences of the mansion tax, or a think-tank, estate agent or commentator warning that Miliband’s plans would bring about the end of capitalism as we know it.  And we all know how that worked out for Miliband.

So it should worry Theresa May that the coming increase in business rates is starting to be covered in a distinctly late-period Miliband way. From the Queen to Pizza Express, big names are being rolled out by the Conservative press to oppose the hike. 

The Times leads with the bombshell that Amazon will be handed a tax cut under the plans, as its large warehouses in industrial areas will be eligible for lower business rates than bricks and mortar shops on the high street.   “Tax cut for Amazon as high street shops suffer” is their splash. The Telegraph goes one better, with an analysis from the Nuffield Trust predicting that the increase will hit hospitals and general practitioners, heightening the crisis in the NHS. “NHS hit by crippling rates rise” is the Telegraph’s splash, and to make matters worse the same story is picked up in today’s Sun as well.

The rate rise is going to be the subject of howls of anguish not only by well-loved big brands but by popular local businesses too, adding to the government’s discomfort. But the difficulty is that the Conservatives have already made a virtue of tying their hands as far as the public finances are concerned, particularly on revenue raising. They’ve ruled out income tax increases and Philip Hammond has committed to increases in the tax threshold.

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And for all they might have won a mandate to continue cutting back the public realm, we saw with the row over tax credits how quickly that lasts the moment you try to take away any part of the state with universal or near-universal use. As far as austerity is concerned, the Conservatives did all the politically easy cuts last time around. They are fast running out of discreet ways to raise taxes, too.

Of course, most Conservative politicians feel fairly relaxed about the electoral insurance policy they have in the shape of Jeremy Corbyn. Two points on that: firstly, British politics is volatile. Just look at the surge in Ukip support last time around or the performance of the SDP in the early 1980s. If voters turn against the government, they will find an outlet somewhere, even if it isn’t the Labour party.

The second point is that is that now the votes have all been counted, it looks clearer and clearer that Donald Trump’s triumph came because he secured most of the votes you’d expect of a “generic Republican” after eight years of a Democratic president. Not as many as a Mitt Romney or a Marco Rubio or some other blank vessel would have got, and he underperformed Republican candidates elsewhere across the country.

Yes, Trump had a great deal of help along the way.  I think it’s unlikely that MI5 will intervene in a pro-Corbyn way at the next election, as the FBI’s  James Comey did in the American contest.  And American politics is less fragmented than Europe’s, meaning that disgruntled voters are just as likely to find a new home than return to Labour.

Nevertheless, the clear lesson of Trump is that the inevitable conclusion from “Jeremy Corbyn can’t win” isn’t “the Conservatives can’t lose”. 

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