Labour’s nightmare about what to do in next month’s budget and the Tories falling in to the trap once again of hailing Thatcherism as a route to victory appears to have no connection whatever. Yet they stem from the same dark cause. Insecure leaders look to the past for guidance and draw the wrong lessons. The future is too hazy and intimidating.
As they agonise about which taxes to increase in the budget Keir Starmer and Rachel Reeves are trapped now because, in the build up to the last election, they misread why Labour lost in 1992, the most mythologised election in Labour’s history. In spite of the deeply entrenched anti-Tory mood before the election last year Starmer, Reeves and those around them worried that they could still lose. ‘We need to avoid this being 1992’ was a common refrain, referring to the election that many assumed Neil Kinnock would win. Instead the Conservatives won a fourth successive victory then having focused on Labour’s ‘tax and spend’ plans during the campaign.
In order to prevent a similar defeat, Starmer and Reeves ruled out increases in income tax, national insurance, VAT and corporation tax. They made New Labour seem daring in 1997 when Tony Blair and Gordon Brown pledged not to increase income tax, leaving open other levers some of which they needed to pull in spite of presiding over a healthily growing economy. As a result of that extreme timidity before the last election it is impossible to exaggerate the behind the scenes sweaty, sleepless anguish as Starmer, Reeves and several others decide what to do in order to ‘balance the books’ next month. No final decisions have yet been taken making current feverish media speculation unreliable. Currently ministers and officials are studying a huge range of possible tax rises before finally deciding on which to include in the budget.
But the biggest call of the lot is whether or not to break one of their pre-election pledges and increase a tax that is guaranteed to raise substantial sums. Amongst a mountain of options they are contemplating a rise in income tax. This should not be an impossible hurdle to leap. Tony Blair and Gordon Brown increased national insurance substantially in their 2002 budget. It proved to be the most popular budget since polling of such fiscal evens had begun. Boris Johnson announced a ‘social care levy’. The tax rise had no negative impact on his then soaring popularity. For Starmer and Reeves the pre-election pledges are the problem. In an era of extreme mistrust they might break a fundamental promise in the thorny area marked ‘tax and spend ’. Owing to their own pre-election caution whatever they choose to do now becomes hugely risky.
There is, though, a Shakespearean twist. Labour did not lose in 1992 because of their ‘tax and spend’ plans as mythology suggests. They played a part but a relatively small one. There is a broader context to elections. In the case of 1992 Kinnock had been leader of the opposition for too long. This was not his fault. He became leader after the slaughter in 1983 and was never going to win in one leap. Having lost in 1987 Kinnock took a deep breath and continued heroically the draining, stressful internal reforms. For nine years voters viewed Kinnock challenging his party. That is a long time to watch a leader make speeches, give interviews, announce policy reviews, deliver soundbites powerlessly. Not helped by brutally hostile newspapers voters had turned away by 1992. He was doomed to lose. In contrast John Major seemed fresh and new. As Kinnock reflected soon afterwards “Voters thought they had a change of government when Major replaced Thatcher”.
Labour lost in 1992 because Major played with great skill the years from his arrival in Number 10 to the election while Kinnock had been Labour leader too long. He could have proposed a big cut in income tax and it would not have changed the basic dynamic. Here is an iron law of politics for the modern era. Anyone who has been leader of the opposition for more than one election cannot win.
The wider context of an election campaign determines whether Labour has any space to be a little bit honest about ‘tax and spend’. After Johnson, Truss and Sunak, Starmer and Reeves had far more space than they dared to realise, enough at least to keep the tax door slightly ajar. The Tories could not win in 2024.
The current Labour leadership is not alone in turning to the fickle past for assistance given that future is so hazy. Every Tory leader-including the so called ‘moderniser’ David Cameron- looks to Thatcher as their model. They move further to the right after an election defeat and are then slaughtered again. In Cameron’s case he failed to win decisively a winnable election. Like a film noir the lesson is never learned. Kemi Badenoch showed she is a good performer in her second speech at the Conservative conference last week, an important test of leadership, but Thatcher was the star again in Manchester. Not only were there deifying events celebrating what would have been her 100th birthday but Badenoch’s strategy was to head rightwards with an overt nod to Thatcherism. She will slash spending. She will cut taxes. This is what Thatcher did. She must do it too.
Yet this was not what Thatcher did. In the 1979 election, when leader of the opposition, she promised to switch the tax burden from direct to indirect taxes. That was it. 1979 was not a big ‘tax and spend’ election. More widely ‘Thatcherism’ was a reaction to the unique chaos of the 1970s and improvised haphazardly in the 1980s. Claiming the mantle did not help Hague, Duncan Smith, Howard, and Cameron. Yet Badenoch chooses to make the same misstep.
After Labour’s 1983 election horror Neil Kinnock declared in his first speech as a new Labour leader “1983 never, ever again”. Party members cheered and then gave him hell for the next nine years. Now every Labour leader should chant ‘Misreading 1992…never, ever again’ and every Tory leader ‘Misreading 1979…never, ever again’. But for now Starmer and Reeves are discovering, and Badenoch will do, that a misreading of the past leads to the most painful political punishment as they contemplate the hell that is the near future. If Starmer and Reeves had dared to look to that future before the 2024 election, and delved deeper about what they could and could not pledge, they would still have won. As a bonus they would have been in a safer place now.
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[Further reading: Is Starmer’s downfall inevitable?]
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