Credit where it’s due, at least Alastair Darling’s statement today has the virtue of being a simple change, rather than the convoluted nonsense he was talking about a couple of weeks ago.
I find the psychology of Labour ministers throughout this debacle fascinating. At each and every turn their response has been to sell off their critics rather than sort out the problem at root. At first, they simply couldn’t understand why a change that benefited the majority of people was proving so unpopular. In interview after interview they blathered on about most people being better off and “hard working families” as if the inherent unfairness of it all didn’t matter. When that didn’t work, both three weeks ago and now, their response has been to buy off not just the people least effected by the change but a large number of other voters as well.
Three weeks ago, it was a massive bribe aimed at the over-60s while offering almost nothing to young workers. Today it is an even bigger bribe aimed at most of the workforce (at least this time it isn’t something that people paying the higher rate of tax will be benefiting from), the only catch being that the worse off you are, the more you will remain out of pocket. It remains a cynical exercise in squeezing the least “attractive” element of the working poor – single, young, un-unionised (for “attractive” read “deserving” in NuLabSpeak) in order to bribe the fattened masses; the bribe has just ended up being a little bigger, that’s all. That should tell you all you need to know about Labour’s commitment to social justice.
What will be fascinating is how they manage to dig themselves out of the hole they’ve effectively dug for next year’s budget. They’re options appear to be limited. Do they not increase personal allowance by inflation next year? That will effectively mean that their plan is to claw back all of this tax over the next few years. Do they cut spending by Â£3bn? Another stealth tax? Or do they bite the bullet and whack it on higher wage earners?
Of course all these numbers are a bit fictional; Darling could still be saved by the Laffer Curve and a spot of wage inflation. With the precarious state of the economy though, I wouldn’t bet on it.