28 July 2022
Labour’s Agenda
Time for proposals.
By John Watson
Actually it was rather good. Despite the mindless twaddle spouted about the Sunak/Truss debate being too aggressive in tone, the reality is that it was no more so than you would expect in such a gladiatorial contest. Of course both candidates should define their position strenuously and, because they did so, those who watched were left with a good idea of what divides them. Liz Truss promises immediate tax cuts, a holiday from green levies and a reversal of the proposed increase in national insurance and corporation tax. No doubt she has persuaded herself that this is right but how objective is that decision? Suppose she felt that the party membership favoured a period of higher taxes. How would she be positioning herself then? Would she stick to her low tax agenda and prejudice her chances in the leadership race or would she suddenly become infected by fiscal caution? I think we all know the answer to that.
So does Sunak’s deferral of the low tax Elyseum indicate a more principled approach, heroically risking defeat rather than jeopardising the nation’s finances? Not really. It was Sunak who proposed the increases in National Insurance and corporation tax in the first place. He can hardly traduce them now, although the fact that historically he has taken a more cautious fiscal position means that he probably has the better understanding of what is needed. Anyway, that is what the financial commentators seem to think and if Truss wins and is wrong her fall will be spectacular.
Whatever the party members may decide, their vote is but a curtain raiser to the general election which must be called before December ‘24. This has to be Labour’s to lose and, if they can develop a convincing programme, they will be swept to power with a large majority. The starting point, however, needs to be the programme and it is here that Sir Keir and his myrmidons need to focus over the coming months. On what should they be concentrating?
The first thing must be a rebalancing in favour of the young. That isn’t just because it is fair that those who work hard should be able to buy decent homes and have respectable incomes, however much that may be the case. It is also a question of efficiency. Young people have more energy than their elders and also, often, more innovative ideas. Clearly that is something which we need to harness when reforms are needed. And are we doing that? Not exactly. The Equality Act 2010 protects against age discrimination in relation to recruitment, promotions and dismissals unless it can be shown to be objectively justified and proportionate. Couple that with an ageing population and the effect must be a bias against the young. Not very sensible really.
Then there is the question of stability. We often hear nowadays about how the young are intolerant and excessively politically correct but much less about the reasons why that is the case. Some blame it on the media. Others on the general cussedness of youth. Perhaps, though, it is something rather different, frustration at a system biased against them which prevents their energies being harnessed for the common good. Instead dynamism and ambition are thwarted and driven down less constructive paths. The survival of our society depends upon the young finding a satisfactory place within it. Fail to do this and the deluge will follow.
No doubt Labour’s policy wonks are already focused on this area with plans for more homes and rebalancing the nation’s wealth through the tax systems. They should also consider the repeal of that part of the Equality Act which relates to age. If employers want a young workforce let them have one. If they would rather employ more experienced and proven talent, so be it. These are issues for the market not for legislation.
The second thing must be the reform of the state sector. For a long time we all believed that problems in delivery of health care in the NHS were down to a shortage of funds. Now it seems that is not the case – we are paying more for the service we receive than are comparable European countries. So, clearly, the system is no longer operating as it should, perhaps not surprising when you bear in mind that some of the principles (“no cost at the point of delivery” for example) were set 70 odd years ago. Perhaps they represent a sensible approach, perhaps they do not; but either way it is time for a fresh look at how things are organised, comparing them with mechanisms used successfully elsewhere.
Sometime before the crisis in Ukraine there was a series of articles on how the army would cut down its tanks and use the saving elsewhere. Whether this was a good idea is a matter for specialists and one upon which this column has no view. At least, however, it showed that someone was thinking through the options and not just using the defence budget to reinforce yesterday’s solutions. A similar level of strategic thinking is required in other state institutions.
Then, of course, Labour should look at the tax system and the extent to which it reinforces or obstructs other objectives. One thing which needs reducing is the level of stamp duty land tax which, by attaching a fiscal penalty to the purchase of residential property, makes it unattractive for the elderly to trade down. Move to a smaller house before that final shift to a flat or retirement home and you pay an extra tranche of tax. No wonder that people prefer to remain where they are, often denying the market and accommodation which would be suitable for a large family. Surely it would be better to introduce a level of tax on capital gains, perhaps with a rollover arrangement so that nothing was actually paid unless cash was actually realised.
If Labour wants to provide a reforming government they need to get their policy ducks in a row before they come to power. Now they have leisure to think; once they are in government their priority will be dealing with crises. So we need major initiatives now, before the next election; and if Liz Truss’s fiscal policies turn out to be as disastrous as the commentators predict, that election may not be so far away.
