On tax, Labour must remember: “It’s not our money stupid, it’s theirs”
by Peter Watt
So the battle of the speeches is over. All three leaders made pretty good speeches. Nick Clegg, who I have a soft spot for, probably had the toughest job of all but seemed to go down well in the hall at least. But the real battle was Miliband versus Cameron.
Trying to be non-biased, I think that Ed Miliband just won the battle, although David Cameron wasn’t far behind. They were both very similar in that they were both very personal, focused on values and were policy light. They were also both used as opportunities to attack the other; both with some force; and both speeches were passionate and effective.
But in truth, Ed Miliband managed to use his speech to build much needed confidence in him from his party. Critically he also managed to persuade a sceptical press that he really could win an election. It may or may not have been a game changer but it was certainly a very significant event in the slow run-up to the election in 2015. For that reason I think that he won the battle. But he has not yet won the war.
There were two very significant passages in the speeches. The first from Ed:
Unless and until Labour really does understand the tax point then they will struggle to convince people that they are not profligate “tax-and-spenders”. The truth is that too many people in Labour really do think that taxation is an inherently good thing. That somehow taxing people, the state taking peoples’ own money from them, is somehow morally right.
But taxation is not inherently good in itself, it is certainly necessary if the state is to undertake things that we decide it needs to. Taxation pays for caring for the vulnerable, educating our young, treating our sick and defending our streets and borders. It is these things that are the “good” things and not the act of taxation itself.
This is not a pedantic point. The former view, that taxation is inherently good, means that the state is taking what it is entitled to. It means that the government has a duty to tax people and that the government is therefore spending its own money. As a result, the respect for, and the robustness of the stewardship of, the proceeds of taxation is lessened.
It means that if there is a social ill then we will see government spending as the obvious and indeed the right and proper response. Outcomes are secondary to the fact that we must and can do something – after all it is the government’s money.
The latter view, that taxation is a necessary evil, means that the state reluctantly takes only what it absolutely has to. It means that the government has a duty to keep levels of taxation to a minimum. And it means that there will be a greater focus on the sound stewardship of the proceeds.
If a problem is identified then many options will be considered, with government intervention being a possible option but not a must. The outcomes of the interventions are more likely to be the focus rather than a straight desire to act.
Labour has muddled up a desire to deal with social ills with a need to spend money. Of course some problems require taxpayers (not the government’s) money to help deal with them. But plenty of others may benefit from more imaginative responses that require less or even no state aid. All too often we have not allowed ourselves to even explore these as the “spend” option was easier, available and seen as the right response from a benevolent state.
Now of course Labour have to change their thinking whether they want to or not. They can’t keep raising taxes indefinitely and they will need to reduce expenditure. That requires them to think about problems differently and to challenge existing solutions to existing problems. The voters expect them to do this. They are worried as to whether Labour can really change the way it perceives taxation and can really see solutions to problems other than spending.
So Ed won the battle of the speeches. But the war? That’s another matter because David Cameron is going to use the “tax and spend” attack again and again, and Ed’s: “Next April, David Cameron will be writing a cheque for £40,000 to each and every millionaire in Britain” line will come back and haunt him.
Ed would do well to use an old Clinton trick and have signs made for Labour campaign HQ that frequently remind himself and his team:
“It’s not our money stupid, it’s theirs.”
Peter Watt was general secretary of the Labour party
So the battle of the speeches is over. All three leaders made pretty good speeches. Nick Clegg, who I have a soft spot for, probably had the toughest job of all but seemed to go down well in the hall at least. But the real battle was Miliband versus Cameron.
Trying to be non-biased, I think that Ed Miliband just won the battle, although David Cameron wasn’t far behind. They were both very similar in that they were both very personal, focused on values and were policy light. They were also both used as opportunities to attack the other; both with some force; and both speeches were passionate and effective.
But in truth, Ed Miliband managed to use his speech to build much needed confidence in him from his party. Critically he also managed to persuade a sceptical press that he really could win an election. It may or may not have been a game changer but it was certainly a very significant event in the slow run-up to the election in 2015. For that reason I think that he won the battle. But he has not yet won the war.
There were two very significant passages in the speeches. The first from Ed:
“A tax cut for millionaires. Next April, David Cameron will be writing a cheque for £40,000 to each and every millionaire in Britain. Not just for one year. But each and every year.”And the second is from David Cameron’s speech in response:
“I sometimes wonder if they know anything about the real economy at all. Did you hear what Ed Miliband said last week about taxes? He described a tax cut as the government writing people a cheque. Ed… Let me explain to you how it works. When people earn money, it’s their money. Not the government’s money: their money. Then, the government takes some of it away in tax. So, if we cut taxes, we’re not giving them money – we’re taking less of it away. OK?”Put aside the silly looseness in language from Ed over the “each and every millionaire” line, these two passages hold the key to one of the central battles of the next election – Labour’s competence on the economy.
Unless and until Labour really does understand the tax point then they will struggle to convince people that they are not profligate “tax-and-spenders”. The truth is that too many people in Labour really do think that taxation is an inherently good thing. That somehow taxing people, the state taking peoples’ own money from them, is somehow morally right.
But taxation is not inherently good in itself, it is certainly necessary if the state is to undertake things that we decide it needs to. Taxation pays for caring for the vulnerable, educating our young, treating our sick and defending our streets and borders. It is these things that are the “good” things and not the act of taxation itself.
This is not a pedantic point. The former view, that taxation is inherently good, means that the state is taking what it is entitled to. It means that the government has a duty to tax people and that the government is therefore spending its own money. As a result, the respect for, and the robustness of the stewardship of, the proceeds of taxation is lessened.
It means that if there is a social ill then we will see government spending as the obvious and indeed the right and proper response. Outcomes are secondary to the fact that we must and can do something – after all it is the government’s money.
The latter view, that taxation is a necessary evil, means that the state reluctantly takes only what it absolutely has to. It means that the government has a duty to keep levels of taxation to a minimum. And it means that there will be a greater focus on the sound stewardship of the proceeds.
If a problem is identified then many options will be considered, with government intervention being a possible option but not a must. The outcomes of the interventions are more likely to be the focus rather than a straight desire to act.
Labour has muddled up a desire to deal with social ills with a need to spend money. Of course some problems require taxpayers (not the government’s) money to help deal with them. But plenty of others may benefit from more imaginative responses that require less or even no state aid. All too often we have not allowed ourselves to even explore these as the “spend” option was easier, available and seen as the right response from a benevolent state.
Now of course Labour have to change their thinking whether they want to or not. They can’t keep raising taxes indefinitely and they will need to reduce expenditure. That requires them to think about problems differently and to challenge existing solutions to existing problems. The voters expect them to do this. They are worried as to whether Labour can really change the way it perceives taxation and can really see solutions to problems other than spending.
So Ed won the battle of the speeches. But the war? That’s another matter because David Cameron is going to use the “tax and spend” attack again and again, and Ed’s: “Next April, David Cameron will be writing a cheque for £40,000 to each and every millionaire in Britain” line will come back and haunt him.
Ed would do well to use an old Clinton trick and have signs made for Labour campaign HQ that frequently remind himself and his team:
“It’s not our money stupid, it’s theirs.”
Peter Watt was general secretary of the Labour party
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