It has now been a year since this Labour government took office. A year, to note, in which their communication has been abject. Defensible policies have not been defended in the right way, and instead of having the humility to admit that they got some things wrong, they pressed ahead regardless. There has also been quite a bit of handcuffing due to certain promises, such as the one about not raising taxes on ‘working people.’ All in all, Labour’s first year has been a lesson in how not to communicate.
Contentious Decisions
The signs were there from the start. The budget included three contentious decisions, none of which have been communicated particularly well. Take the means testing of the winter fuel allowance, for example. There is undoubtedly an argument for doing so, namely, that it should be given based on need. But when better-off pensioners are spending it on holidays or restaurant meals, it’s clear that the need is not there. The money could easily be spent on better things that benefit more people. Remember, this was continuously phrased as something that could fill the £22 billion ‘black hole’ in the public finances — something that seems to be ever-present in a game of Labour comms bingo.
You cannot expect the ordinary working person or pensioner to relate to this warped logic. Such an explanation may work for the bond market, but it is not enough to make people understand why they will no longer be receiving £200 to £300 extra a year. The backlash was so prolonged that the government has been forced into an embarrassing U-turn that could easily have been avoided if only they had worked this out properly, and stuck with it.
Then came the changes to inheritance tax, demanding farms pay a 20 per cent rate on assets over £1 million. This was again framed as necessary to balance the books. And yet, this was another measure that would not have saved very much money in the grand scheme of things. But in contrast to the winter fuel allowance, this is a policy with serious flaws. Chief among them is the fact that the group in question has a powerful and influential figurehead in Jeremy Clarkson. The other is that it completely misunderstands the economics of farming. The former is arguably of lesser long-term concern for the government than the latter. While Clarkson’s presence undoubtedly helped the issues around the changes gain media attention, the story’s popularity has since faded. The latter issue, however, and specifically the government’s response, is a far bigger concern.
By capping the threshold of inheritance tax at £1 million, the policy fails to recognise that, despite farming being an asset-intensive industry, it generally lacks profitability. Not only have you got the value of the land, but you also have the barns for storing crops, the tractors and all their attachments, and — where applicable — livestock and all the related costs. These factors make it likely that many farms will end up over the £1 million threshold, including family farms that the government should be concerned with protecting.
The main point of contention is that none of these farms will be especially rich. As Clarkson’s farm shows, turning a profit from farming, particularly with the effects of climate change making weather conditions more unpredictable and unfriendly, requires a lot of hard graft for normally very little reward. The government’s ill-devised policy only makes it harder for farmers to turn a profit, and yet it has not been reversed. This could be a symptom of a wider flaw in our political system: the persistence of stubbornness.
The pressure group Led By Donkeys may be a reference to a description of British troops in the First World War (‘lions led by donkeys’), but it quite aptly describes just how stubborn our politicians have become. To U-turn is to show weakness, and to press on regardless is to show strength and conviction — a status quo that is completely topsy-turvy.
A Self-Made Dilemma
In hindsight, this government created most of its problems by trotting out the line about not raising taxes on ‘working people.’ The definition is so broad that it could theoretically cover just about anyone except pensioners, children, and the unemployed. Even non-doms, one of the groups that have been taxed, could technically be classed as ‘working people’ if you extend that definition to simply mean anyone who works and makes a salary from their work.
The rise in employers’ national insurance, for instance, while technically not in breach of this promise, is still going to hurt working people. By making it more expensive to employ people, a Labour government may have inadvertently sent unemployment up. For students like me and those just entering the world of work, this is even more of a concern. Fewer job opportunities mean that we have to compete with a larger pool of applicants who will almost certainly be more qualified or more experienced. This makes it more difficult for us to find jobs in fields that complement our degrees and that we feel passionate about working in — unless, of course, you’ve only ever wanted to assemble Big Macs for a living.
Ironically, the NI rise was almost the only tax-raising policy that could raise enough money without breaking Labour’s covenant with working people. Even indirect taxes, such as fuel or tobacco duty, will harm working people by raising the price of these goods. You can argue that such a promise was necessary to convince the public that they could trust Labour with the country’s wallet, but it may end up contributing heavily to Starmer’s ‘decade of national renewal’ being halted halfway through once the likely tax rises in autumn kick in.
So, what are the lessons Labour should heed from the last 12 months? Firstly, make a solid argument to market a policy that references fairness and use it. Secondly, admitting that you got something wrong shouldn’t be a sign of political weakness. And finally, don’t make promises so vague and haphazard that you end up having to do more spinning than a washing machine to prove that you’ve kept your word. If Labour tightens its strategic screws and swallows some of that pride, it might start looking like an organised government with a sober strategy that can withstand a great deal.
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