The Tories portrayed Labour this week as the party of high taxes, writes Mark Hennessy, London Editor
AN INTRIGUING moment occurred in the Royal Institution on Albemarle Street in London on Thursday night when Prime Minister Gordon Brown appeared before a mostly left-leaning audience of academics and businesspeople.
Once sugar-coated questions from loyalists were out of the way, an American who runs an internet company told Brown that he would be going back to New York in three months time because “my tax bill has jumped through the roof”.
The American is one of the top earners who find themselves paying 50p in the pound on income over £150,000 (€171,000) from April 6th, along with enduring the loss of tax and pension allowances that will bite hard.
Replying, Brown said Labour had decided “that the broadest shoulders” should bear more weight while the damage to the nation’s accounts over the last few years begins to be repaired.
However, Labour’s deputy leader, Harriet Harman, sought to romanticise tax, speaking of her visit earlier that day to a SureStart children’s centre in Nuneaton in Warwickshire, where “the joy on the faces of teachers and kids was visible to all”.
Stay here, Harman earnestly told the American, pay your taxes. “One day a child from Nuneaton may develop the cure for a disease that you have,” she said.
The American was not convinced.
“I would rather employ people in my company and take the money myself and work with the charities myself, because I think I can do a better job, more efficiently myself.”
Disapproving faces turned to him. “Shame on you,” said one.
Quickly, however, Business Secretary Lord Peter Mandelson, who has done more than anyone in New Labour to build its relationship with business, intervened, conscious that the exchange harked to Labour of a different age.
“I think he makes a very reasonable point. What he is saying is that he wants to throw everything he’s got into doing his work well, making his business grow, and that’s what we want to see people do in this country. The way in which we generate wealth in this economy, the way in which we pay for our health service, for education is by successful enterprise and business. We were elected as a pro-business, pro-enterprise party. That’s what we remain as,” he said.
Labour, before 1997, had realised that business needed competitive tax regimes, less burdensome regulation, along with major State investment in infrastructure and education, said Mandelson.
“We have done all that,” he said.
“I understand why you feel that that this is not the time to be facing an increase in national insurance charges, which is precisely why we are not asking you at this time. It isn’t the right time. That’s why it isn’t going to be introduced, reasonably modest as it is, I must say, until next year.”
Mandelson, of course, had deliberately misunderstood the American, who had not complained about higher national insurance a year from now, but, rather, like others, had complained about higher income tax today.
The plight of the €150,000+ camp is not something that will unduly worry the vast majority of British voters, but Labour is concerned by its failure this week to stop the Conservatives from portraying it as the party of high taxes.
For months, the Conservatives, particularly shadow chancellor George Osborne, have been quietly derided by business leaders as inexperienced and weak, but his declaration that he would not implement half of the insurance increase has struck a chord with them.
For the public at large, much of the controversy will have passed them by, but Labour has struggled for several days to turn the argument back onto the kind of public service cuts that the Conservatives would have to impose to stay within their own loose figures.
Everything can be done by “efficiency savings”, says David Cameron. No public servant needs to be sacked because 40,000 leave every year. Little of this is credible, but Labour’s ability to attack is weakened because so many of its own promises are based on similar ruses.