Gordon Brown’s retreat on the 10p rate is clearly a massive humiliation. Before he became Prime Minister, his supporters claimed he had two great qualities:
- First, he was a man of principle who had devoted his life to helping the poor, just as his father had done.
- Second, he was a great political strategist, constantly thinking three moves ahead of his opponents.
No one can make those claims now.
No consistent, principled supporter of the low paid would propose a tax increase targeted at the low paid.
No master strategist would have put himself in the position of trying to force this measure through the House of Commons three days before local elections.
How did this happen?
The most striking aspect of Gordon Brown’s behaviour throughout this episode has been the extraordinary state of denial. In March last year, in a hearing held by the Treasury Select Committee, Michael Fallon pressed the then Chancellor on the point that there would be 5.3 million households that lost out. In evasive and misleading evidence (so misleading, in fact, that the independent Statistics Commission chastised Gordon Brown for it – see here), the then Chancellor refused to accept the 5.3 million figure, even though his own official had confirmed it the previous day. ‘At the end of the day I do not think we will see the effects that you are saying’ he told the Committee.
Even after an answer to a Parliamentary Question confirmed the 5.3
million households figure, Mr Brown would not admit the truth. On 20th
March, he told Labour’s NEC that no one would lose out and ‘challenged
people to send him payslips which showed otherwise’. On 31st March 2008,
he told a meeting of the Parliamentary Labour Party, ‘no one would be
less well-off as a result of the 10p tax rate abolition’. In an
interview with Nick Robinson of the BBC, he claimed that ‘the biggest
beneficiaries of that Budget were lower income people generally’. And
in briefing with journalists on his return from Washington on 18th April,
he rejected claims that five million low-paid workers would have to pay
more tax and declared: ‘No one will lose out.’ He also denied that
there was going to be a substantial revolt. Gordon was going to tough
The repeated claims that no one was going to lose out were always
untrue. Ministers and officials have long accepted that there were
losers. Even on the day of the 2007 Budget, the Treasury implicitly
accepted this by saying that ‘four out of five households would gain or
not lose from the personal tax package’. And yet the Prime Minister
would not – could not – acknowledge the truth. The British public are
entitled to ask whether he was being dishonest or delusional.
At this point, it is not clear whether the concessions made are real or
largely cosmetic. Not every household that loses as a consequence of
the abolition of the 10p rate will be compensated. More complexity
will be involved (for a measure that was supposed to be about
simplification) and it is an essentially bureaucratic solution – the
low paid will be taxed more but get a bit more back from the
Government. How effective will raising the minimum wage be in
compensating the losers? It is, of course, an ‘unfunded spending
commitment’, as Gordon Brown would say.
The story may move on from a Parliamentary revolt. But the issue now
is the character and competence of the Prime Minister. Out-of-touch.
Short termist. Unprincipled. Strategically inept. Disingenuous (at
best). And weak.