Tax doesn’t have to be taxing
I’ve never written a Budget, but I imagine they’re pretty complex documents. Still, that’s presumably why the Treasury is full of bright, sharp-eyed experts.
And yet somehow Budgets routinely turn into PR disasters. And they arrive far faster these days. It took Labour more than a year to put right the damage done by scrapping the 10p tax rate. George Osborne endured months of pressure before backing down on the pasty tax.
His successor, by contrast, has changed course so quickly you half-expect him to publicly abandon a measure in his next Budget before he’s even announced it.
Is it really possible that no-one in the Treasury or Downing Street even noticed the decision to raise National Insurance on the self-employed breached a Conservative manifesto pledge? Their reference point may have been Mr Osborne’s comments after the election, when the “no tax rises” pledge was limited to the form of NI paid by employees.
For the Chancellor, this is humiliating — a central plank of his first Budget, one he defended in radio and TV studios, is scrapped within a week. But the Prime Minister can’t escape blame — Theresa May made a point of defending the principle of the rise, even as she was trying to find ways to soften the blow.
In the end, they decided the political damage was simply too great. Better the short-term pain of a u-turn than the long-term political punishment of standing firm.
How was such a major mis-step possible? As usual, the answer is Brexit. Britain’s impending departure from the EU dominates every conversation, every thought. Even the Budget is secondary — something that became painfully evident as it unravelled.
And yet the headlines were fading away, the story was disappearing. Why drag it back into the spotlight? It’s because, while voters see Mrs May as supremely powerful and without viable challengers, in the Commons the picture is rather different.
Her majority is just 17 — so it doesn’t take much to put a Commons vote on a knife-edge. The NI rise struck at a core Conservative constituency, and some backbenchers were taking a great deal of heat as a result. With only a handful of rebels needed for an embarrassing defeat, the Prime Minister had to back away from a fight she might have lost.
Jeremy Corbyn’s response to the climbdown may have been pitiful — but that wasn’t Mrs May’s primary concern. The real opposition to the Prime Minister is gathering on the benches behind her.
Originally published at paulosbourne.net.