Robert Palmer is Executive Director of Tax Justice UK.
The tremors that accompanied the resignation of Sajid Javid exposed a fault line underpinning the Government’s new electoral coalition of leafy shire seats and so-called ‘Red Wall’ constituencies in the Midlands and North of England.
Rumours splashed across the papers in the run up to the reshuffle included plans to cut pensions’ tax relief for higher earners, changes to capital gains tax, and a new mansion tax. All of this was briefed as on the cards to help fund increased public spending to “level up” previously forgotten parts of the country.
Such policies might be anathema to traditional Conservative voters in places such as Maidenhead and Sevenoaks. But what do people in the former Red Wall areas think?
In the wake of the election my organisation, Tax Justice UK, decided to see what voters thought about politics, government promises on spending, and how best to fund these. Along with the research company Survation, and with the support of the University of Sheffield, we carried out seven focus groups. We spoke to people in the new Conservative seats of Blyth Valley, Bury, and Wrexham, and as part of the project we also went to Long Eaton, London, and Reading.
Somewhat predictably, Brexit dominated people’s decision-making. But we also got a real sense that the Prime Minister was right to describe many of his new supporters as lending him their votes. One new Conservative voter in Blyth Valley told us: “I felt terrible the next day, did I do the right thing?”
But there was also no love lost for the Labour leader, with one person in Wrexham saying “I struggled between Boris Johnson and Jeremy Corbyn … I don’t particularly like either of them but there was no way I was voting for Corbyn … Boris Johnson is just the best of a bad bunch”.
Voters in Blyth and Wrexham told us that they felt abandoned by politicians from all sides. One person in Blyth said: “Public services are falling apart on a massive scale. Austerity has shafted the North East”. Across all the areas we visited, we heard a consistent message that people expected to see improved public services. No one called for tax cuts.
As part of our research we explored different ways in which the Government could fund extra spending. In particular we were curious to hear voters views on taxing wealth. The current tax system relies heavily on taxes on income and consumption. A number of Conservative thinkers have argued that the government should rebalance this towards taxing wealth more.
Will Tanner, now head of the influential think tank Onward and originator of “Workington man”, has written that taxes should be low on labour but higher on “unproductive parts of the economy, such as property”. Tim Pitt, a former senior Treasury advisor, recently argued that the Conservatives need to tackle inequality and should look at higher taxes on wealth to help do this.
Since the reshuffle the mansion tax seems to be off the agenda but Rishi Sunak, the new Chancellor, is reportedly still looking at other forms of tax on wealth.
This chimes with a promise in the Conservative manifesto to “redesign the tax system so that it boosts growth, wages and investment and limits arbitrary tax advantages for the wealthiest in society”. We asked people their views on this statement, initially not telling them where it was from. The language was seen as positive. Participants were surprised when we told them it was a Conservative commitment, but they hoped to see it happen.
As part of the focus groups we also tested specific proposals for how to tax wealth more.
The people we spoke to supported the idea of bringing capital gains tax into line with income tax rates, a policy last introduced by Nigel Lawson in 1988. Last year we carried out a poll with YouGov and found that 66 per cent of Conservative voters agreed that income from wealth should be taxed at least at the same level as income from work. As one participant in Blyth put it, “Why should someone who is working hard to stay on the breadline, why should they pay more tax than someone who makes all that money from shares”.
We also tested reducing pension tax relief for higher earners and adding a few extra bands to council tax. Both proposals received more qualified support. The voters we spoke to wanted to see more action to tackle tax avoidance.
However, blanket calls for much higher taxes on wealth went down badly. Most people supported the idea that the wealthy had by and large earned it.
Our research shows that the Prime Minister needs to deliver for his new voters if he wants to keep their votes. People expect to see more investment in local services. And they’re prepared to see some increases in taxes on wealth to help pay for it.
You can read the full report here.