The political situation could hardly be more fluid but it’s not controversial to predict that Keir Starmer’s days as Prime Minister are numbered. Alternative candidates are coming forward and they have Labour Party members only as their constituency.
By and large, people don’t join the Labour Party to maintain the status quo – that would be conservative with a small c. And in any case, if things were going well for the government, there would be no call for change, so the candidates will have to put forward new ideas.
The thinking is that if stodgy, fiscally responsible Labour has led us to the current position, more radical, maybe even socialist policies are the answer. We do not hold a view on that but wish to look at where it leads.
The current leadership knows two things: that higher borrowing is out of the question (unless already very high interest rates are to become astronomical); and that general taxation is at historically high levels. It also suspects (or at least professes) that growth is the way forward (but unfortunately keeps promoting policies that undermine growth).
How does a new leadership square the circle? It’s no good just to cock a snook at the bond markets – there is no alternative way of raising significant funds. Asking the public to invest in bonds may raise a few quid but not enough to make a difference.
We have suggested before in this blog that real change could be achieved by looking instead at spending – not just cutting budgets but a true examination of what government money is being spent on and an evaluation of the difference between necessity and desirability. However, nobody hoping to be elected leader of the Labour Party is going to advocate spending cuts. That doesn’t need explaining.
A successful candidate is going to have to promise higher spending or higher investment and where are the funds going to come from, if not borrowing, or income tax, or VAT?
A successful candidate will probably promise to “tax the mega-rich” (or maybe just “the rich”). A quick look at the figures will show that raising the top rate of income tax will not produce the sort of revenue needed to make a difference, so a tax on the assets of the most well-off is the only answer. An annual wealth tax has been shown to be doomed to failure, which is why a one-off, huge levy is the only answer. You read it here first, folks.
