UK Politics

Labour’s tax problem is only the beginning

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Today’s impending budget represents a litmus test for Keir Starmer. Decades of neoliberal orthodoxies have evaporated over a year, with a Conservative government using unprecedented powers of the state to safeguard health and economic well-being. The normal boundaries of political demarcation have blurred significantly.

Starmer was elected on a platform promising to continue the core policy legacy of his predecessor and to fight the consequences of a hard Brexit with more gusto. Instead, he has been playing catch-up with the party in power for nearly a year.

It has been reported that the Chancellor will propose a corporation tax increase from 19-25% over the Parliamentary term. Corporation tax is paid only on profits, so the firms able to shoulder the burden of financial responsibility will still be able to operate freely within the loosely regulated environment while re-positioning their historically antagonistic position as acquiescent to the needs of the rest of society.

Originally, Labour’s position was to oppose this increase. Starmer has come under vehement criticism from the left in his party to accept this hike, especially while there has been such a sustained pay freeze for workers before and during the pandemic. They are now showing signs of tacit support for a gradual tax increase.

A fairer tax system is part of the benchmark by which all Labour principles and their leaders are judged. Though it is possibly a smart piece of political manoeuvring at this point, Starmer will continue to haemorrhage the initial support that elevated him in the first place.

Straddling this terrain is difficult for any opposition leader, but even more, the ground is being ceded to the Tories and the window of opportunity to reinvent Labour’s economic credibility is closing.

There are political points to be gained from the Tories’ deteriorating relationship with business and Starmer knows this. In preparation for the election in a few years, Labour will need to position themselves tactically, before the Tories or right-wing media publications do it for them.

Starmer faces an uphill task to re-professionalise the Labour Party in the eyes of the electorate. The current cadre inside the Labour leadership is keen to reinstate pro-business elements to the party. They have insisted on a modest and progressive position that does not involve making corporations that have had a successful pandemic pay more tax.

Frightened of being tarnished with accusations of ‘old Labour’ tax-and-spend policies of the 80s, Starmer is providing a cautious approach which is quickly being criticised internally.

The budget set out by the Chancellor may offer an approach that would be difficult, at least ideologically, for Labour not to back. Starmer wants to be seen to be improving Labour’s image but may be forced to once again support the Tories, providing no opposition and no credible alternative.

Probing further into the first year of Starmer’s leadership is crucial in understanding this malaise-turned-reticence.

The political logic of Starmer’s time as Labour leader has been to over-state his non-Jeremy Corbyn-ness rather than embracing the platform he was elected on. Though it is important to calibrate a nuanced economic message that cuts through, not enough time is being spent on constructing a consistent alternative message.

Too much time is being spent on what are the perceived consequences of a Labour position. Credibility can only take you so far, but a lack of vision will get you nowhere. Corbyn’s mistake was to campaign early and campaign often. He protested in perpetual motion, wearing a costume that brought him formal power, but unable to honour the broad coalition that Labour must represent.

Though we should be recognising that this opposition leader is possibly the most capable candidate for Prime Minister in decades, Starmer’s vague and incoherent blueprints for economic and social reform complicate this conversation. The leadership seems nervous, unwilling to create common ties between these reforms, offering only disparate ideas clinging to perceived biases.

Corbyn had a patchy history of associations and was easily targeted for extreme affiliations. Starmer spent much of his time as head of the CPS prosecuting terrorists and using his position to help those who most needed it. This picture of the honest public servant politician is in danger of being lost to political missteps typified by ideas of nationalism and flag-waving.

Perhaps the initially shrewd political opposition to tax rises will be lost too, endlessly chasing the Tories over ground he will never cover.

Starmer appears to be relying on platitudinous assumptions about society fundamentally changing post-Brexit and post-COVID, but those are journeys we go on together, that we mutually construct. Too little time has been spent outlining an alternative vision and most of the political energy has been spent largely supporting this government.

This path ignores the needs of the moment and can only hope to inspire the current believers.

Part of Starmer’s ‘moral crusade’ is to treat business as essential to recovery, but in reality, it is more about changing the language long associated with business mistrust of Labour policies. Like the Prawn Cocktail Offensive of 90s Labour, Starmer is placing energy on a mission to expand support for his policies to the people least likely to care.

This is not to say that traditionally unaffiliated blocks should not be a part of Labour’s plans to change society, but the ground of what is possible is shifting.

Even from inside the traditional centres of political power, Labour still appears passive. It seems to be watching politics while it is happening. Social movements have erupted, demanding change, which seems to speak more directly to the emotional state of being that has characterised this last year.

Starmer must do more than attach trendy rhetoric of the moment such as ‘climate change’ or ‘social responsibility’ to these policies. If he fails to do this, he will not be the one helping us prepare for the future.

Cover image: Jeremy Corbyn via Flickr. Image was cropped. Licence here.

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