Andrew Grice: The 'Squeeze the rich' mantra is back in fashion

Cameron is gambling that the public won’t lose much sleep about a public spending squeeze

Saturday 10 January 2009 01:00 GMT

Sir Alan Sugar and J K Rowling are much more deserving of their wealth than Roman Abramovich and Lewis Hamilton, according to some well-thumbed research being pored over by ministers.

The polling is about public attitudes to tax, an issue firmly back on the political agenda after a rethink by the Conservative Party. In his first three years as Tory leader, David Cameron refused to promise tax cuts. He believed Gordon Brown's doom-laden warnings – that they would mean "Tory cuts" in public services – had cost his party dearly at the past two elections, and that voters didn't believe the Tories would deliver their tax cuts anyway.

Mr Cameron's line changed this week, when he proposed tax cuts for savers and extra help for pensioners. It is good politics, tossing some red meat to his party's hungry tax-cutting hunters and answering Labour's charge he would "do nothing" to help victims of the recession. The downside is that it leaves the Tories even more out of step with the rest of the world, as even a reluctant Germany plans a second fiscal stimulus and Barack Obama proposes a massive blitz to spend America out of recession.

However, the Tory move will play well in Britain and is significant. It means Mr Cameron no longer fears the "Tory cuts" attack. He is gambling that the public mood has changed since 2005, that people have had their fill of Labour's stealth taxes and won't lose much sleep about a public spending squeeze.

Ministers also claim the mood on tax has changed, but in a different way. The financial crisis means that tax rises for the rich, taboo for Labour since Tony Blair became its leader in 1994, are now fair game. Hence Alistair Darling's November announcement of a 45p in the pound higher top rate on earnings above £150,000 a year.

A YouGov poll for the Labour-affiliated Fabian Society has cheered ministers. The Darling plan is supported by 76 per cent of voters, with 13 per cent against. Even among Tory supporters, the margin is 64-25 in favour. The survey suggests Labour could have been even bolder: a 45p top rate for people earning more than £100,000 is backed by 59 to 23 per cent.

Asked which of those on a list of wealthy names deserve to be rich, 37 per cent opt for Sir Alan, 26 per cent Rowling, while only 7 per cent say Hamilton, 2 per cent the Duke of Westminster, 1 per cent Mr Abramovich, while the model Jodie Marsh attracts precisely 0 per cent. By a margin of more than 2-1, people believe the banks in America and Britain, rather than the Government, are most to blame for the economic crisis.

The public's attitude to successful wealth-creators may not have changed, but it is more hostile to bankers and the City's bonus culture. "We were told massive rewards at the top were a fact of the modern world or would benefit us all," said Sunder Katwala, the Fabians' general secretary. "Instead, it is the costs of failure which have been shared, so we are all paying to clear up somebody else's party."

Mr Katwala is proposing a Top Pay Commission to look into rewarding success and penalising failure. After all, we already have a Low Pay Commission.

The Universities Secretary John Denham, who will submit a report to a Fabian conference on "fairness in a recession" in London next Saturday, believes the poll shows that in a downturn, tolerance of unjustified earnings falls and support grows for sharing the costs fairly. "Labour should take comfort for this support of our view of fairness," he said. "But the survey does not show a more general support for raising taxes for redistribution. People are clear that support needs to be earned."

Labour and the Tories appear to be heading in different directions on tax, but are not quite as far apart as they seem. The Tories know that Labour would love them to promise to reverse the 45p top rate, so wisely avoid the trap. Instead, they pledge to try to stop Labour's proposed rise in national insurance contributions, which would hit people much lower down the income scale.

Other polls, including a ComRes survey for The Independent last month, suggest the Tory pledge to spend less than Labour may prove more popular than Labour's platform of tax rises. John Curtice, professor of politics at Strathclyde University, points out that the number of people who think taxes should be cut, even if it means a reduction in services such as health, education and welfare, has risen from 20 to 27 per cent since 2005, while the number who want to extend services has dropped from 40 to 29 per cent. He said: "The financial crisis seems to have restored some public support for tax and spend, but support is still lower than it was at the last election. Cries of 'Tory cuts' may still have less resonance than previously." Tax is back, and will again loom large when the election comes.

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