Support 100 years of independent journalism.

  1. Politics
10 March 2017updated 15 Mar 2017 12:24pm

The Tories’ tax troubles show how tough they will find Brexit

Theresa May could need to take far more unpopular decisions to get the best Brexit deal.

By Stephen Bush

U-Turn if you want to, the Lady’s not for Turning. At least not yet. Theresa May has stuck by her plan to increase national insurance contributions but the vote will be held off until the autumn.

Politically, that makes it an easier sell: if you want to avoid the crisis in the public finances that the growing trend of self-employment is going to cause, you need level out two inequalities: between the employed and the self-employed in the tax system, and between the self-employed and the employed in terms of workplace rights and protections. Philip Hammond’s blunder was in asking the self-employed to pay now and be protected later.

But the run-up may not work out as the PM intends. As the U-Turn over business rates shows, giving your internal opponents a run-up doesn’t always work out how you plan. The steady drip of anti-NICs stories may make the parliamentary arithmetic harder rather than easier. And seeing as Downing Street prefers not to fill the news of its own accord, anti-NICs stories are unlikely to go away anytime soon.

Adding to the general sense of disarray, the ghosts of Christmas past are circling. David Cameron’s old spin chief Craig Oliver was on Newsnight last night saying that the sense that a manifesto pledge has been broken leaves the government in a “very difficult” position. Michael Gove has taken a pop in his Times column, warning that May’s caution risks bungling Brexit. And ITV’s Chris Ship has spotted footage of David Cameron himself saying what looks to my  eyes to be “Breaking a manifesto promise? How stupid can you be?” (Although it could also be “he”, “she” or “tree” though the latter seems implausible somehow. Head over to Twitter if you want to see a whole bunch of political journalists engaging in amateur lipreading.)

Does it really matter? Despite the fact the government is being criticised by its own grandees and facing an embarrassing U-Turn with big implications for future revenue, the Conservatives are still in possession of a record-breaking lead in the opinion polls. (The latest YouGov puts them 19 points ahead, and happily, once again finds a plurality of voters quite likes the NIC rise: 47 per cent in fact.)

Sign up for The New Statesman’s newsletters Tick the boxes of the newsletters you would like to receive. Quick and essential guide to domestic and global politics from the New Statesman's politics team. The New Statesman’s global affairs newsletter, every Monday and Friday. The best of the New Statesman, delivered to your inbox every weekday morning. A handy, three-minute glance at the week ahead in companies, markets, regulation and investment, landing in your inbox every Monday morning. Our weekly culture newsletter – from books and art to pop culture and memes – sent every Friday. A weekly round-up of some of the best articles featured in the most recent issue of the New Statesman, sent each Saturday. A weekly dig into the New Statesman’s archive of over 100 years of stellar and influential journalism, sent each Wednesday. Sign up to receive information regarding NS events, subscription offers & product updates.
I consent to New Statesman Media Group collecting my details provided via this form in accordance with the Privacy Policy

But it is a reminder of three things that are easy to forget about the May government. The first is that it has a small Commons majority. The second is that it has inherited a series of dubious promises, both from its Conservative predecessor and Vote Leave. Those two sets of promises can’t really be reconciled internally let alone with one another. The third is that May has few die-hard allies when the going gets tough.

All of which means that the issue to watch is the question of that E60bn EU divorce bill, back in the news again after the PM refused to rule out paying it on Brussels and Boris Johnson said she should channel Margaret Thatcher and refuse to pay large sums into the EU. 

One of Britain’s best cards is that, as a EU creditor and a large economy, is to buy the deal it needs by paying an outsized price for the parts of EU membership it wants to keep. We’ve seen how difficult the government finds getting its way on a small and popular measure. It doesn’t bode well for the large and unpopular one it may need to get the best Brexit deal.