The latest budget was popular, but might still turn out well for Labour.
The latest budget has been hailed for being widely popular, even while raising taxes by freezing the Income Tax thresholds and hiking Corporation Tax. In fact, “every policy, including the stealth tax rise on income, was supported by a majority of voters.” Not only was it popular, most voters also thought it was fair.
After the budget, the Conservates opened a 13-point lead over Labour in voting intention polls, while Rishi Sunak the Chancellor has widespread public support. “A majority (55%) think he is doing well as Chancellor, with just 16% saying he is doing a bad job. Even among those who voted Labour at the last election, he has a positive rating.”
Surely these figures are a disaster for the Labour party? Well, not necessarily. There has been plenty of commentary, and political manoeuvring, to attack or put pressure on Sir Kier Starmer as leader from the left. But the budget can be a positive for Labour because it shows that the centre-ground on economic policy has shifted. Tax rises are no longer beyond the pale.
Recent YouGov polling is instructive. While 45% of people think the government is managing the economy well, against 29% saying badly, there may be promise for the opposition in the individual measures. Extending the £20 a week extra for Universal Credit until September was seen as a good idea by 71% while freezing the personal allowance is supported by 58% of the richest voters and by 59% of the poorest. Further, increasing Corporation Tax from 19% to 25% for larger businesses (starting in 2023) is supported by 72% overall, 77% among those who voted both Conservative and Labour at the last election. Indeed, this particular tax change is very interesting. It is most popular among the oldest voters, who support the Conservative in larger numbers (maybe effected by party support) and least popular among the youngest voters, who are more likely to support Labour.
Support for increasing Corporation Tax from 19% to 25% by age
This tax rise is far more popular (8 points so) among richer voters than poorer ones. Two-thirds of the poorest voters (plus pensioners) support the rise but three-quarters of the richest voters ABC1. Having said that, 52% of C2DE voters support the Conservatives, only 27% Labour (a long-standing shift in voting patterns).
Support for increasing Corporation Tax from 19% to 25% for larger businesses, starting in 2023 by social grade
But perhaps the differences between groups of voters obscures the overall picture: the centre ground on the economy is one where the majority of all groups support these rises. Only 10% think the budget isn’t fair, though 41% don’t know. This means that tax rises are no longer politically toxic. So now Labour’s challenge is to be as successful as Sunak has been in making the case that it can be trusted. It may have much to learn about messaging. The Chancellor’s comments this week went down well, but the Times reports that “his comments were hardly spontaneous. They had been carefully weighed after six months of intensive polling and focus groups on the policies and language behind the budget.”
The economic centre-ground is more in flux than it has been in the last decade. The Conservative have been very successful at claiming it both times it has been moved — by promoting austerity as the antidote to supposed overspending, and now offering themselves as the antidote to their own policies (plus, of course, the effect of the pandemic). Though given that “Public spending will fall by £4 billion a year” according to the Institute for Fiscal Studies, austerity has not ended and won’t on this trajectory.
The Conservatives have successfully made the case for tax rises, with even the Telegraph asking “What’s wrong with a 35pc tax burden?”. The question is whether Labour can now capitalise on it to make their own case and successfully paint the Conservatives as promising generosity but not delivering it.
