How left-wingers are dooming Keir Starmer to be one-term Prime Minister

It was more Father Ted than Ten Days that Shook the World, but the brothers and sisters were not targeting the Gold family, owners of Ann Summers, or indeed the Gold brothers of tartan souvenir fame, but the New Club and its unassuming main door, on the presumption that everyone entering is a tycoon or approves of tycoonery. Maybe someone like, say, STUC general secretary Roz Foyer who, on account of her burgeoning property portfolio, was described as such in this week’s Herald newspaper.

New Club members, of which I’m one, come from many backgrounds but as a law-abiding bunch I’m pretty sure one thing which binds them is that they pay their taxes. And now the spectre of an increasing burden looms large in the wake of the Labour government’s humiliating capitulation on welfare reform, which has punched a £5 billion hole in its budget, and an Office of Budget Responsibility warning that the government is living well beyond its means.

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Reform UK on the march

Backed this week by ex-leader Neil Kinnock, there is a belief that whacking a two per cent wealth tax on everyone with notional assets of more than £10 million will rake in over £10bn a year, which would not just plug the benefits gap but potentially fund the £3.5bn cost of lifting the two-child cap, as demanded by the Labour welfare rebels, so no wonder left-wingers can’t see the downside.

But a wealth tax will need an expensive and ponderous new system, both to value assets and administer, and that would give those in the firing line plenty time for evasive action. Many may follow the 25,000 non-doms who left the UK in 2024 before their special tax status was abolished. That £10 billion looks like a fag-packet calculation.

The alternative approach, of taxing all assets including pension funds, might raise the required amount but would hammer the middle classes without the mobility of the very wealthy. As well as ending any hope of spurring economic growth and sounding the death knell of aspiration, it would be political suicide, especially in Red Wall seats where both working-class aspiration and support for welfare reform are strong and Reform is on the march.

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Taxes heading for post-WWII record

The third way, conspicuously not ruled out by the Prime Minister this week, is continuing to freeze income tax and national insurance thresholds until 2030, set to bring an extra £39bn a year by 2028, when the total tax burden as a percentage of GDP will be a post-war record, beating 1948-49 when there was still rationing.

Even higher taxes might have been inevitable without the benefits retreat because of the new commitment to raise defence spending, and a few on the right argue higher tax is not necessarily bad if the revenue is used for targeted investment. If there was a plan for investment, driven by a nimble private sector to transform the economy in tandem with meaningful public sector reform, they argue, higher taxation could help generate capital and economic activity.

But there isn’t. All Labour can do is tax to patch up a bloated and now unreformable welfare system which disincentivises work and regards any assessment of fitness for employment as an affront to human dignity.

Over a fifth of working-age people are economically inactive and whatever new tax raid Labour devises will hit the rest. But as a fifth of those in employment are in the public sector, it means the burden of generating the wealth to pay for it all falls on around 60 per cent of the workforce.

Poor returns on state investments

Nor is government-directed investment guaranteed to produce promised returns. HS2 anyone? After the SNP ferries embarrassment, this week it was revealed its Just Transition Fund, a ten-year, £500 million scheme to replace oil and gas jobs, has only created 110 new jobs in two years following an outlay of £43 million.

Not all its investments have been poor; £325,000 in Moray’s Cabrach distillery helped create 12 jobs in a remote community, but that just suggests the other £42.5m has produced fewer than 100 new jobs. Yes, it “safeguarded” 120 other posts, but it hardly indicates the remaining £450m will be as transformative as boasted.

Digital technology and artificial intelligence are undoubtedly transformative, leading to UK Health Secretary Wes Streeting’s jibe this week that First Minister John Swinney was an “analogue politician in the digital age” because of the SNP’s failure to develop an NHS Scotland app, six years after NHS England’s service was launched.

Stuck in the Steam Age

But the UK Government can’t keep pace with technological change either, the Competitions and Markets Authority having taken five years to produce a system to compel tech giants to strike fair deals for content use, just as AI, particularly Google’s “AI Overview” system, has completely changed the landscape.

But for some, the landscape is unchanged and if John Swinney is stuck in the analogue age, public sector unions are back in the Age of Steam like it’s 1978, epitomised by the far from poor ‘resident’ doctors who have thanked Labour for their 22 per cent, no-strings pay increase by voting to strike for 29 per cent more.

Whether preserving an unaffordable welfare system or buying off greedy unions, all Labour can offer is tax pain for no economic gain. “Property tycoon” Roz Foyer and the New Club wealth-tax warriors will doubtless approve, but Sir Keir Starmer already looks doomed to be the latest in Labour’s long tradition of one-term Prime Ministers.