This nightmarish winter could bring final victory for Brownism
Since the era of New Labour, Britain has been sleepwalking into a social democratic dystopia – a desolate New Jerusalem of high tax stagnation, controlling welfarism and the religious cult of the NHS. Now, with the Conservatives in danger of being flattened by another winter of discontent, we are racing faster than ever toward that final destination. The NHS is plunged into a summer crisis as bad as any January. Officials fear the worst for the coming months as flu and Covid hospitalizations rise. The next energy price hike in October means an armageddon in the cost of living as families are unable to pay their bills. The country is about to be stunned by widespread public sector strikes.
And if you listen to the center-left establishment, the only way for the country to escape this extraordinary combination of crises is to sink ever deeper into the semi-socialist quagmire. Without a shred of self-reflection as to his own contribution to creating this mess, Gordon Brown came out to condemn the winter emergency household energy assistance program as inadequate and to castigate the ‘insensitive’ Tories for s to be debated over tax cuts as retirees choose between food and fuel. He rightly contrasted his enlightened mission as Chancellor to end child poverty with the scenes today “reminiscent of what [he has] starving 1930s reading”.
As the nights darken, we should expect a lot more of the same. In fact, Mr. Brown’s favored solutions of unchecked giving and debt-fueled redistribution can be seen as relatively mild given what the left has in store for us this winter. Socialist activists and trade unionists have launched a new campaign, Enough is Enough, under the slogan “Your need or their greed”. His demands include sweeping minimum wage increases, corporate tax hikes and a pick and mix of hard-left proposals reminiscent of Corbyn’s Labour.
It’s a tough backdrop for Liz Truss. The Tory frontrunner has, to her credit, attempted to challenge leftist groupthink, suggesting she would handle the country’s crisis ‘conservatively’. In recent days, she has said she would rather tackle the energy bill crisis with tax cuts than targeted benefits. His campaign rightly pointed out that it’s crazy to tax people and then give them their own money back in benefits – a favorite tool in the Brownite playbook. But can she keep her cool in the face of a new orthodoxy backed not just by Labor but by much of the wider establishment, from financial experts to the IMF? Unfortunately, there are indications she may already be retreating, with one ally saying her stance has been “misinterpreted”.
If so, it would be deeply frustrating, as there are strong arguments for using tax cuts to help tackle this crisis. They have been criticized by establishment economists as “inflationary,” as if huge new government spending did not pose a similar risk. Rishi Sunak was happy to point out that reversing the National Insurance hike would disproportionately benefit the better off. That may be the case, but there are many other taxes that are particularly burdensome for the poor, including VAT and alcohol taxes. A Taxpayers Alliance study using ONS data found that the poorest households pay the highest proportion of their income in tax of any group – ceding 57p of every pound they earn to the Treasury .
Far from being excessively radical, Mrs. Truss is undoubtedly far too modest in her proposals. The temporary removal of VAT on energy consumption would reduce an average household’s monthly bill by an additional £100. A 40% reduction in fuel taxes and VAT on refueling your car would more than offset the rise in fuel prices. We could cancel council tax payments for the poorest groups and immediately reduce income tax. And what about the abolition of the levy – in fact a tax like the others which, again, weighs most heavily as a proportion of income on the less well-off households?
Yet to even speak in those terms is to see the world through Mr Brown’s redistributive prism – where all that matters is how to divide the pie. It ignores the fact that tax cuts can benefit the whole economy, keeping businesses going and possibly encouraging them to grow, while potentially encouraging work and aspirations. It also assumes, implicitly, that there is nothing else that can be done – from reforming energy markets to changes in welfare – to improve the economic state of the nation.
It is a worldview that has done much to leave Britain in such a pitiful position. It has become establishment orthodoxy — not because it is morally superior, but because it preserves a broken status quo. He kept our stagnant low-wage economy on life support with benefits for the working poor. It concealed poverty not by creating opportunity but by deepening dependence on the welfare state. Gordon Brown’s utopian vision of the tax credit – ironically inspired by Milton Friedman – has resulted in waste and fraud on an industrial scale. He has avoided all major decisions in areas like energy, contributing to Britain’s shocking vulnerability to massive international price spikes.
Mrs. Truss is therefore in a delicate position. If she is not seen as doing enough this winter to help households, she will risk being portrayed as an economically illiterate and selfish conservative, sparking a wave of anti-capitalist populism. But if she’s forced to announce another huge household support package – and doesn’t make it clear that it can’t be repeated and that in future the country will have to take a different path – whatever ‘it will do is entrench the Brownian consensus and condemn the country to ever-increasing fiscal pressure and, in all likelihood, a slower recovery
She must find a third way. She should stand firm on tax cuts, while being careful not to misrepresent what they can do. But it should link its tax reduction program to a broader vision of change. We need a new revolution promoting “customer capitalism”, especially in the energy market. We need massive changes to the NHS, so that it does not constantly threaten to collapse and absorb an ever increasing proportion of the national income. Above all, we must constantly focus on economic growth so that the political debate is not trapped in an endless discussion of redistribution.
So there is an escape route from the Brownite trap. The question is whether the Conservatives are brave enough to accept it.