Walter Scott knew a thing or two: “Oh what a tangled web we weave/When first we practise to deceive.”
In many ways, however, Keir Starmer, Rachel Reeves and their colleagues were deceiving themselves when apparently deceiving the electorate on the subject of taxation.
Just as the great mistake made by Harold Wilson, one of Starmer’s heroes, in 1964 was to rule out a policy move that his advisers knew was necessary to achieve his other ambitions – the move being devaluation of the pound to a less uncompetitive rate for overseas trade – so Starmer and co made the mistake of brushing aside advice from the estimable Institute for Fiscal Studies that the success of his “mission” (to fix the foundations, etc) would require substantial increases in the principal rates of tax. Principal because, instead of frolicking around the margins of the unpopular taxes raised in the recent budget, the chancellor should have resorted to the obvious sources, namely income tax and VAT.
All this fuss about the so-called “black hole” was, sadly, misplaced. The fuss should have been about the physical harm that more than a decade of austerity had wreaked on the British economy and its public services, and the increases in taxation that would be necessary to repair the damage. Unlike the period of austerity under the 1945-51 Attlee government, forced by the devastation of the 1939-45 war, the austerity imposed by the Cameron-Osborne government from 2010 was a cynical political choice.
This is a rough time for the new government, but also for the country. The boasts about reviving economic growth – to the fastest in the group of seven leading industrial nations – have been followed by the embarrassment of a flatlining economy, with some commentators saying further tax increases are hardly likely to improve the situation.
Well, perhaps they should note that although tax increases with no counterbalancing increases in public spending would be one of the last things a stagnating economy requires, if those tax increases are financing a boost to public services and economic demand in the economy, the prospect is altogether different.
Here, we come – I know you have been waiting for it – to that mammoth in the broom cupboard, the second policy decision with which Starmer and Reeves have been deceiving themselves: the idea that they can revive growth while trying “to make Brexit work”.
The evidence is now overwhelming: Brexit doesn’t work. The monstrous amount of paperwork at the borders is making life increasingly difficult for smaller businesses, many of which have almost given up on trading with our main partner, namely the EU. Wine importers have to pay an extra bureaucratic charge for consignments that leave the EU and then again when they enter the UK. As one wine importer observed: “This is bad enough, but at least, unlike perishable imports, the wine does not go off during the customs delays, although costs certainly go up”.
It is all such unnecessary, self-imposed harm: a serious drag on the economic growth the prime minister and chancellor have staked their reputations on. There is so much to do, and a return to the customs union and the single market would provide a boost to trade and growth that is lacking on both sides of the Channel. It is all very well the prime minister wanting to “reset” relations with our former partners, but so far what has been proposed hardly amounts to a row of beans.
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The idea that appointing Peter Mandelson as ambassador to Washington will improve our trading prospects is laughable. Much is made of Mandelson’s experience as an EU trade negotiator when he was a Brussels commissioner, but close observers during the Doha round did not think he was that effective.
With Trump heading for the White House and Elon Musk – the enthusiast for the appalling Alternative für Deutschland – having such influence, this government should not kid itself about a special relationship with Washington. For decades, until that disastrous 2016 referendum, our real special relationship was with the EU. Given the disturbing geopolitical forces besetting Europe, our future lies in re-establishing that relationship. We need the protection of the EU and they need us. Well-meant minor gestures are all very well. But “resetting” should mean getting close to rejoining!
Meanwhile, Starmer should not be running scared of the egregious Nigel Farage. Labour should be pointing out that, of the two big factors currently harming the economy – austerity and Brexit – Farage was responsible for the ills of Brexit, on which he is now trying to capitalise. He is a political impostor: a snake-oil salesman.