Throughout history, the Tories have dodged opportunities to reform the welfare state. Instead, they tax, regulate and hurt their own voters.
It now looks almost certain that the Autumn Budget will impose steeply higher taxes on the most productive parts of British society, including private companies, investors, entrepreneurs and workers, in a desperate bid to raise funds to finance an ever-larger welfare state. Yes, there will be plenty of spending restraint, but the big picture is clear: the state is spending an ever-rising share of our economy, and taxes are being jacked up to pay for this.
To add insult to injury, it is the most economically damaging taxes that are rising, with much higher marginal tax rates in prospect on capital and labour income, and millions more dragged into the 40p tax rates and, absurdly, hundreds of thousands more to pay the 45p tax rate.
For a variety of reasons, those taxes that do less harm – including levies on consumption and pollution – won’t bear the brunt, and the trend rate of economic growth is bound to fall further. It will be a triumph for the patrician view that levels of tax and spend don’t really affect growth or prosperity, that it is the elites’ duty to seize an ever larger share of our national income to direct, control and spend on “good causes”.
And the depressing truth is that this represents a return to the post-1945 norm, as readers of Peter Hennessy’s latest book, A Duty of Care, will recognise. In that era, we went from being a society and economy with an embryonic safety net to a welfare state with an economy attached. As a consequence, we have throttled growth, creativity and competition, driven down investment and triggered a zero sum war between public and private sectors.