On Sunday, I wrote about how Labour’s determination to target what it now wants us to call the “grey wall” explains why, for all the ordure they throw at each other, Jeremy Hunt and Rachel Reeves are in reality battling it out over a very narrow strip of political territory: “the Overton Precipice – the art of teetering on the brink without going over it.”
Since then, the row over the Chancellor’s plans – well not plans, really, aspirations – for the abolition of National Insurance have also highlighted the extent to which this sort of politics creates an increasingly phony public debate.
Yesterday, Hunt walked back the idea all but completely. Per the Financial Times, he told the Treasury Select Committee that abolishing National Insurance was his “long-term ambition” but: “It will be the work of many parliaments. We will make progress but only when it’s affordable to do so.”
How many parliaments do we think adds up to “many parliaments”? Four? Five? (Presumably not fewer than that; he did not say ‘several’.) In which case we’re talking fifteen to twenty years from now. It is not a live prospect.
Gladstone fought and lost his last general election campaign on a pledge to abolish income tax. Hunt and Rishi Sunak are merely speculating about taxes their successors might want to abolish at some point. It looks like yet another instance of the Chancellor’s version of the long-term, which I described last year:
“…a time, an indeterminate but comfortably distant point in the future, at which we will get around to taking those difficult decisions once the urgent demands of our present moment – which must, of course, be our immediate priority – have abated. Crucially, it is always in the future.”
Hence also the disconnect between the purported goal of the policy and the conditions under which Hunt envisions carrying it out. He says abolishing National Insurance is “the right thing for economic growth” – yet per the FT, would not do it unless it “would not pursue the measure if it undermined public services such as health or pensions or required higher borrowing”.
Given that we have an ageing population, and health and pension spending is only going in one direction for at least a couple of decades, what that means in effect is the Chancellor would only push this pro-growth measure in the event that the United Kingdom had already achieved such transformational growth that we could abolish a major tax without any impact on major spending departments. How we get that growth is not stated.
Yet it isn’t just the Government talking out of the side of its mouth on this. Labour has been doing its level best to remind everyone why abolishing National Insurance would be a good idea, at least in theory, by insisting that abolition would have to be paid for by “cutting state pensions or cuts to the NHS”.
Whilst any cut on that magnitude would almost certainly have to touch those budgets (unless one were to abolish, say, Education), this framing leans in to the lie that National Insurance is a hypothecated tax, or even an actual insurance system – the root of the mistaken but extremely powerful belief amongst older voters that they have “paid in all their lives”, despite their generation on average being net recipients of state spending.
More generally, it is also extremely short-sighted – if politically understandable – for Labour to start playing the game of telling pensioners they are hard done by. Bear in mind that Hunt has not scrapped the Triple Lock, nor asked them to pay for social care, nor started taxing housing wealth, or enacted any measure that would actually target this country’s wealthiest age cohort. He has merely drawn up a Budget in which they are not, for once, the biggest winners.
If that is the standard Reeves wants to set for betraying pensioners, Labour is going to be absolutely hemmed in when it comes to some of this country’s least-sustainable expenditures – especially social care, which to date has been kept off the state’s books by making it a statutory duty of local councils, and which is now a major driver of local authorities tending towards bankruptcy.
Sir Keir Starmer can be forgiven if he is determined not to repeat the mistakes of Theresa May, who in 2017 decided to try and use her then 25-point lead to find a solution on social care and almost threw the election. But the result is a stalemate in which Britain’s political economy is clearly failing, but neither major party currently intends to do much about it.