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Paul T Horgan: Hammond’s Budget stumble shows up Labour’s weakness


What to make of the first Brexit Budget?

Philip Hammond did not actually use the B-word in his statement.  Jeremy Corbyn used it once, but without prefixing it with the word ‘Tory’.

There have been howls of outrage about the rise in National Insurance Contributions (NICs) and a broken manifesto pledge.

The changes will see the 9 per cent rate of class 4 NICs currently paid by the self employed earning between £8,060 and £43,000 rise to 10 per cent in April 2018 and to 11 per cent in April 2019. This amounts to £350 a year from April 2018 and a further £350 a year from April 2019.

This is what all the fuss is about. £7 a week extra from next year, rising to £14 a week the year after that.

All parties aspiring to be in government do have a problem.  There seems to be an unwritten rule in British elections, which states that no party that promises a tax rise in their manifesto will ever win.  Ed Miliband tried to buck that trend with his Mansion Tax and restoration of the 50p tax rate.  He led Labour to its worst defeat in over a quarter of a century in 2015.

To be fair, Miliband was massacred in Scotland.  In England, Labour had a net gain of seats over the Conservatives, but it could have been more under a better leader with more attractive policies, like not promising a tax rise.  The Conservative victory was at the expense of the Liberal Democrats.  This may explain the limits to government complacency.  Under any leader apart from Corbyn or his goon squad, Labour might have a chance in 2020 if Brexit becomes a banana skin.

In the 1992 General Election, Labour had also pledged tax rises, or they had been deduced by the Conservatives and not properly denied by Labour.  1992 was also the previous time that there was a surprise victory by the Conservatives over Labour.  Tax was seen as key.  Traumatised, Labour refrained from raising personal taxes until a decade later, when Gordon Brown hiked up NIC one year after winning a general Election to raise £40 billion for the NHS.  Sound familiar?

It is possible that one of the reasons that Ed Miliband lost so badly in 2015, or at least did not gain more, was that that his tax rise policies did affect an awful lot of people who worked in the media.  They may have influenced programme content in early 2015.  Certainly, Miliband began to get a really rough ride that year, being hauled over the coals during Question Time in Leeds.

A person living in a £2 million house in Notting Hill, which was handy for Television Centre, while earning over £150,000, could occupy a senior position in the BBC.  That kind of person may be self employed.  Certainly, there was a bit of stink a few years back over the number of well paid BBC presenters who were not actually BBC employees, but contractors.  So it is possible that the protests we are hearing now may originate from those on whom this spotlight did not fall a few years back.

George Osborne had a similar spot of bother to Philip Hammond last year when he proposed slashing some welfare payments.  The media was full of people who would be affected by the cut, including one unfortunate Tory voter who cried on cue during the BBC’s Question Time.  What seems to be absent – so far – is a similar roll call of ‘victims’ of this tax hike.  It is likely that the ‘victims’ are all suffering under the burden of high-five- or six-figure salaries.  And work at the BBC.

There is opposition to the tax rise. But it is coming from the Conservative back benches.  The arguments appear twofold.  Firstly it is against Conservative ideology to impose taxes against ‘strivers’.  Secondly, it is bad form to wriggle out of an explicit manifesto commitment.  There are counter-arguments as well.  Firstly, this is a ‘levelling-up’ of disparate NIC rates, and is thus ‘fair’ taxation.  Secondly, the manifesto pledge apparently only applied to the main NIC rate for employees, although that bit was never made clear.  Thirdly, it is all for a good cause; the £2 billion cash raised will be whipped off smartly to fund social care, which is a current cause célèbre.  You self employed, think of the grannies while missing your weekly Big Mac, fries and shake.

So is this tax hike an element of yet another ‘omnishambles Budget’ to equal that on pasties?  Can the Conservatives actually have an ‘omnishambles Budget’, given that the alternative is John McDonnell’s neo-Marxism?  At the time of writing, it is too early to tell.  Well, at least about the first.  Nobody wants John McDonnell in No 11.  Certainly, the rise has distracted from the Chancellor’s very humorous speech.  Philip Hammond’s gags were funnier than George Osborne’s dry wit.  If Hammond continues like this there may be need for a drummer in the chamber to provide the requisite two fast rimshots and a splash cymbal every few minutes.

All this really does is once again expose the absence of a proper opposition party that can present credible alternatives.  In the last few days, it is been disclosed that Labour’s plan to raise money includes a 20 per cent wealth tax on the the richest people, promising to raise £800 billion in commissar-confiscated cash. It wouldn’t. All that would happen is that the appropriated money, if it raised that amount, would result in a couple of pleasant years of unsustainably high state spending before the money ran out and there would be no more cash to replace it.  This is the economics of Marxism in practice.  It’s been done before in Venezuela, where human development is now in reverse.  But then Labour’s left remains in thrall to the economics of Venezuela, disaster and all.

And that really sums up the ‘problem’ in British politics.  We currently have a choice between Philip Hammond or Hugo Chavez.  But Hugo Chavez is dead, and his country is dying.  However, Tom needs his Jerry.  Wile E Coyote needs his Road Runner.  Thesis needs its antithesis.  Be thankful that the government having a free-ish run is Conservative.  And that Philip Hammond is not going for the full Gordon Brown.

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Paul T Horgan
Paul T Horgan
Paul T Horgan worked in the IT Sector. He lives in Berkshire.

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