Commentary and opinion on national and regional politics by Seema Malhotra

Saturday 2 May 2009

The 50p tax needs a stronger narrative or it will cost Labour dear

Some time ago I was aware of the YouGov/Fabian poll result that showed levels of public approval for a 50% tax rate for the rich. Earlier Fabian research has also shown support for higher tax rates particulary where hypothecated for public services. This is not a new conversation, but it was a huge and significant leap for (New) Labour as it finally opens the door to attacks that the Labour of high taxes and uncontrolled public expenditure is back.
I personally do not believe that the party of old is back. I also believe it made economic sense (as well as political sense) to make the move in the budget in April though I would not on previous signs have expected a jump above 45%.
Even so, we are in tight economic times and every part of society needs to play its part. My concern is not so much with the 50% tax rate, but with the lack of a clear narrative as to why we have done it, that keeps the wealthy parts of society bonded in common purpose with the poorer parts of our country.
Labour has been successful not because it has stood up for one section of society, but because it supported aspiration for all parts of society. You could be poor, you could be on middle income, you could be rich. But Labour was on your side as you developed your talent, pursued your dreams and supported yourself and your family. And through this was a common ambition for Britain. Cool Britannia with a loose tie and rolled up sleeves, despite cycnicm, I believe is still a contribution to our culture and our modern story of our nation.
I do not think the wealthy, even the socially aware, will now believe Labour is the party for them, without a narrative as to why the tax rate was needed. Was it about fundamental consideration of fairness today and economic necessity in the interests of Britain? Was it punishment of the rich generally just for being rich? Do we see all wealthy people as proxies for risk taking irresponsible bankers?
It should be the former. Indeed I don't really want to subscribe to a mob-like mentality that indiscrimately seeks a social "out group" that can be blamed for everything. The 50p tax should not be about punishment for the wealthy, but part of a clear and well communicated story of how the nation needs to move next, and why this is necessary and fair to do at this stage.
It is vital we maintain a cross-class progressive consensus that we have held together for twelve years, and I do believe that many of those who are better off would recognise that the burden needs to be shared. Wielding the axe against the rich indiscrimately with no clear message to accompany the act may make us temporarily feel better, but could cost Labour dear in the long term.