With the Budget due in November, the government is in a grim position. Public services and the wider state are visibly dysfunctional – just look at the mistaken release of the Epping sex offender. High prices and rising bills are putting pressure on household budgets; the cold weather bringing energy bill costs into sharper focus. All the while, Labour is intent on sticking to its self-imposed fiscal rules, which limit how much it can spend – and the party is also trapped by the promises it made when elected. Its manifesto pledged never to raise VAT, national insurance or income tax.
This leaves ragged scraps of solutions for Treasury officials to pick at: a gambling levy, limiting Isa allowances, windfall tax on banks, some form of wealth tax. But if these are introduced and don’t raise the required cash – the Chancellor Rachel Reeves is currently looking at having to raise £20-£30bn in revenue – then they could do what previous tax tinkers (eg the inheritance tax on farmers, hiking national insurance on employers) have done before them: annoy influential interest groups without fixing the fundamentals.
But what if the government broke its tax promises? (Many argue it already has with the employers’ national insurance rise.) Would it be worth the reputational hit for the big money you can raise from upping VAT, income tax or workers’ national insurance?
The first ever polling on these trade-offs, shared exclusively with the New Statesman, suggests the government could afford to break these manifesto promises and still win support. In fact, every way you look at this new polling, by Persuasion UK, its least-worst option is to raise one of those taxes if it means making a tangible difference that would be rewarded by voters by the end of this parliament.
The polling presented different scenarios of government achievements and failures, by the time of an imagined 2028 general election, to a panel of 4,000 people. It found:
- Breaking its manifesto promise not to raise workers’ national insurance resulted in a -6 per cent change in the government’s net approval rate.
- Breaking its manifesto promise not to raise income tax resulted in a -3 per cent hit to approval.
- Breaking its manifesto promise not to raise VAT saw no statistically significant change.
These drops in approval are smaller than if it failed on certain policy priorities:
- A -13 per cent hit to approval if child poverty rises.
- A -10 per cent hit to approval if crime rates rise.
- A -7 per cent hit to approval if energy bills rise.
The polling also found reputational gains for delivering on certain policy priorities:
- A 10 per cent approval gain for significantly reducing NHS waiting times.
- A 5 per cent approval gain for significantly decreasing small boat crossings.
- A 4 per cent approval gain for child poverty falling.
All higher than the 3 per cent bump in approval for sticking to its promises not to raise income tax, national insurance or VAT.
These results suggest that, if there is no other way of raising enough revenue to improve the NHS, crime, small boats, child poverty and cost-of-living, then the clear least-worst option for the government is to break its tax commitments – a trade-off that figures in No 10 and Treasury are aware of, the New Statesman understands.
As Rachel Reeves plans her Budget, she may conclude that the rewards for measurable positive change outweigh the risks of breaking promises trapping her in a cycle of unpopular tinkering and tweaks.
You can hear more about this exclusive polling on the New Statesman Podcast.
[Further reading: Why are more people dying homeless?]
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