The British opposition party deserves credit for embracing economic reality rather than trying to appease its radical left-wing base.
The British opposition party deserves credit for embracing economic reality rather than trying to appease its radical left-wing base.
D emocrats in the U.S. have shifted so dramatically to the left in recent years that they make Barack Obama appear a quaint centrist. Biden Democrats have proposed raising almost every tax on the well-off — the highest income-tax rate, the corporate rate, the capital-gains rate, and the dividend tax — while proposing a new wealth tax on unrealized capital gains.
It’s a different story in Britain, where the once staunchly socialist opposition Labour Party has moved to the center.
Economic conditions in Britain are perilous. The country is in danger of becoming the sick man of Europe, trapped in a low-economic-growth pattern of less than 1 percent per year. If present trends continue, by 2030, the formerly Communist nation of Poland (which is now growing at 3.6 percent a year) will be wealthier than Britain.
This may explain why the opposition Labour Party has decided to risk angering its base by rejecting a series of left-wing proposals it had made as recently as 2020. Rachel Reeves, who would become chancellor of the Exchequer if Labour wins this year’s election, has just pledged that she would not raise the 25 percent corporate-tax rate and could even cut it “should our competitiveness come under threat.”
“This Labour Party sees profit not as something to be disdained but as a mark of business succeeding,” she told an economic conference this week. “I don’t see a route towards having more money for public services that is through taxing our way there. It is going to be through growing our way there.”
Nor is Reeves the only Labour leader to sing this song. Sir Keir Starmer, who is set to become the next prime minister if Labour forms the government, says economic growth would be his “obsession” while in office because it is the only way to fund adequate public services in the long run.
Labour has also promised not to institute a wealth tax, increase the top income-tax rate above the current 45 percent, or reinstate a cap on bankers’ bonuses it once imposed. It even promises more housing by relaxing rules on construction in the “green belts” that surround British cities. That’s something the ruling Conservatives haven’t done. Jeremy Hunt, the chancellor of the Exchequer for the Conservative government, spoke the same day that Reeves did only to say there would be less room for tax cuts in his budget next month.
Voters across the spectrum are tired of a Conservative Party that has governed for more than 13 years but has few genuine accomplishments to its credit. A November YouGov poll found that one in four voters now believe Labour would be the best choice to revive the economy. Fewer than one in five (19 percent) think the Conservatives have the best policies for growth. The only good news for the Tories is that 52 percent of respondents chose either “none of the above” or “don’t know” when asked which party they trusted the most to grow the economy.
For now, Labour’s charm offensive is working, even if many remain suspicious of its true motives. Iowa senator Chuck Grassley, a former GOP chairman of the Finance Committee, praised Reeves and wrote in a social-media post that Democrats should emulate her: “She is for wealth creation. She feels u don’t tax ur way out of economic problems. U grow ur way out. VERY REAGANESQUE.”
We welcome Labour’s apparent embrace of economic reality, even if its platform still has fantasy elements embedded in it — including gobs of spending on green energy and lots of borrowing. Still, Labour deserves credit for courting moderate voters rather than trying to appease its most ardent members. Given that Britain’s tax burden is the highest it has been in 60 years, the Conservative Party is running out of time to propose a plausible alternative that will give voters a reason to keep it in power.