He has chosen his path – Boris Johnson redrawing lines of what it means to be a Conservative
The significance of Boris Johnson’s announcement goes well beyond social care.
It sets the tone and the terms for the next general election and signals what type of prime minister he wants to be.
The wager is clear, he believes voters will grudgingly forgive him for breaking not one, but two manifesto commitments if it means a huge increase in spending on the NHS and social care.
By going back on his 2019 guarantee against lifting National Insurance, income tax or VAT, and temporarily scrapping the triple lock for pensions, he is counting on their understanding.
Back then, of course, the prime minister explicitly promised to fix social care without tax rises – so make no mistake, this is a big political gamble.
The surprise announcement of an increase in dividend tax alongside the National Insurance rise was a clear attempt to try to broaden the tax base while at the same time neutering one of the criticisms of this policy – that it is unfair because working people would foot the bill.
But, despite that effort to see off criticism, questions remain. What about wealth taxes? What about wealthy pensioners?
They get the benefit, but they don’t actually pay into the levy – so there is controversy there.
Most significant though is what this all says about the changing face of the Conservative Party under Boris Johnson.
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PM ‘accepts’ breaking manifesto commitment
In his statement, the prime minister claimed: “We are the party of the NHS.”
That has always been the strapline for the Labour Party, the issue on which Labour has always won with voters.
The Conservatives’ strapline, by contrast, has always been the claim to be the party of low taxation that is most trusted on the economy. Well, not under Boris Johnson.
The 2019 Conservative manifesto included a personal ‘guarantee’ from Boris Johnson that there wouldn’t be tax rises
He is redrawing the lines – some could argue he’s stealing the clothes from Labour – and wants to go into the next general election as a prime minister who is prepared to break promises and raise taxes to fund public services.
The calculation, I think, is that there is a new appetite for public spending.
The risk for Johnson is that there are many low-tax, small-state Conservatives out there who will be deeply uncomfortable with the shape of the party under his leadership, but those are the terms in which he has decided to lead his government – he has chosen his path.
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Heidi Alexander says ‘fairness’ will be government’s ‘guiding principle’ when it comes to taxes at next budget
Another hint that tax rises are coming in this autumn’s budget has been given by a senior minister.
Speaking to Sunday Morning with Trevor Phillips, Transport Secretary Heidi Alexander was asked if Sir Keir Starmer and the rest of the cabinet had discussed hiking taxes in the wake of the government’s failed welfare reforms, which were shot down by their own MPs.
Trevor Phillips asked specifically if tax rises were discussed among the cabinet last week – including on an away day on Friday.
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Tax increases were not discussed “directly”, Ms Alexander said, but ministers were “cognisant” of the challenges facing them.
Asked what this means, Ms Alexander added: “I think your viewers would be surprised if we didn’t recognise that at the budget, the chancellor will need to look at the OBR forecast that is given to her and will make decisions in line with the fiscal rules that she has set out.
“We made a commitment in our manifesto not to be putting up taxes on people on modest incomes, working people. We have stuck to that.”
Ms Alexander said she wouldn’t comment directly on taxes and the budget at this point, adding: “So, the chancellor will set her budget. I’m not going to sit in a TV studio today and speculate on what the contents of that budget might be.
“When it comes to taxation, fairness is going to be our guiding principle.”
Read more:
Reeves won’t rule out tax rises
What is a wealth tax and how would it work?
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Afterwards, shadow home secretary Chris Philp told Phillips: “That sounds to me like a barely disguised reference to tax rises coming in the autumn.”
He then went on to repeat the Conservative attack lines that Labour are “crashing the economy”.
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Chris Philp also criticsed the government’s migration deal with France
Mr Philp then attacked the prime minister as “weak” for being unable to get his welfare reforms through the Commons.
Discussions about potential tax rises have come to the fore after the government had to gut its welfare reforms.
Sir Keir had wanted to change Personal Independence Payments (PIP), but a large Labour rebellion forced him to axe the changes.
With the savings from these proposed changes – around £5bn – already worked into the government’s sums, they will now need to find the money somewhere else.
The general belief is that this will take the form of tax rises, rather than spending cuts, with more money needed for military spending commitments, as well as other areas of priority for the government, such as the NHS.
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