Tuesday, 25 November 2008

Toynbee's flights of fantasy

. Polly Toynbee really has excelled herself in today's Guardian. She has always been known as something of a Brown loyalist but her glorious trumpeting of the 'end of the New Labour era' and a 'return to social democracy' today really do ring hollow. They ring hollow for anybody who has woken up this morning who has been taken out of National Insurance Contributions (in 2011, of course) only to be hammered on the return pass by hikes on petrol, alcohol and tobacco (tax rises that are disproportionately more likely to hit people on lower incomes).


Of course, a significant proportion of the 'half the working population that earns under £23,000' will also be hit by a 0.5 rise in NIC's at the same time as those under £20,000 move out of paying altogether. Toynbee lauds the 'great' cut in VAT which will 'help every household' but as has already been shown the reality is somewhat different; not only is that cut minimal to say the least it is being funded by the hikes mentioned above which for people on lower incomes will make it's effects negligible to non-existent.

In total fairness, there are moments of sobriety in the article like this one;

"Sadly, the VAT cut will help the poorest least: apart from in their energy bills, they spend least on non-food items while the big spenders get most benefit. The IFS says the VAT cut will only spur the buying of the "most expensive, infrequent items" like white goods and furniture."

However, the author seems to see no contradiction between her hyperbole and the cold hard facts of which she seems, at times, to be obviously aware. Perhaps a clue to the origins of this delirium come in the second paragraph;

"Symbolism is everything in the volatile irrationality of these times. When markets zigzag between exuberance and despair, confidence is the only currency. The language, the mirage, the smoke and mirrors, it all matters as much as the substance."

In other words, the author is carried away by the symbolism of a Labour government which *appears* to have 'unfurled its own battle banner of social justice'. This is none more so the case than with the new 45p band for earners of over £150,000. Toynbee informs us that 'only 1.3% earn more than £150,000' but does not stop to question if that really should be the case; why such a low proportion earning that amount actually pay tax in the first place. Without referencing tax loopholes; which could cost this government as much as £40 billion, the new tax band is purely symbolic and utterly useless.

It is neither redistributive (because, as pointed out above, lower incomes are getting stung too) nor any help in financing the governments spiralling public debt. Obviously some measures are welcome; like the help for Job Centres and the determination to invest money publicly in things like social housing. However, yesterday, Labour tried to pull off a magic trick; present itself as a party of social justice while slipping tax hike after hike into the fine print. Obviously Toynbee is easily fooled for this was not a redistributive budget and a new tax band for high earners does not make it so; Labour is a timid friend of social justice and is still so even after Alistair Darling's measures yesterday.

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