Sunder Katwala on the Fabian Society's Next Left blog is trying to stir up a bit of trouble over the 45p tax issue. When it was announced I wrote a post saying that the announcement of a new higher rate signalled the end of New Labour. In the comments we had this exchange...

Sunder: So are you sure you know which way your leadership will jump on this?
Iain: Yes I am sure. And you sound as if you would have liked the figure to have been 55P ... or perhaps higher?! :).

Now Sunder, being a man of the left (and a decent one at that), is trying to stir up a storm over something which won't even come into effect until 2011. So if the Tories win the 2010 election it won't have even come onto the Statute Book, I assume. Therefore, they wouldn't even have to reverse it.

When I said "Yes I am sure" I could have meant one of two things. Sunder obviously thinks I meant that they would oppose the measure hook line and sinker. Alternatively I could have meant that I am sure they won't jump into the bear trap laid for them by Gordon Brown. The beauty is that I could have meant both and been quite consistent.

This measure was nothing to do with economics, it was all to do with politics - class politics. So it's quite right that the response is political too. And the response has been perfect. "Reversing this would not be a priority" is what has been said by Tory spokesmen. Which says everything and at the same time, says nothing. Why should it? Because at the moment, there is nothing to reverse.

It is a profoundly unConservative thing to approve of class based tax increases. No Conservative I know of would do such a thing. There may well have to be tax increases in the future - Gordon Brown's economic chaos has almost made that a racing certainty. None of us know what the situation will be like in 2011, so why the Conservatives should have to give any response to the 45p rate at all is beyond me.

Sunder does his best to cause foment in Tory ranks...

If you believed – as I believe most Conservatives do – that this was the wrong policy, you should say so. If you believe there are strong moral, economic and political arguments against higher taxation on top earners, then you would make that case. After all, your luck would really, really be in if your political opponents had declared the death of New Labour, vacated the centre-ground of British politics, abandoned Middle England and all the rest of the things you have all been saying over the last 48 hours. Where’s the trap in that? It sounds like more of an open goal.


Keep stirring mate. Of course there are very strong arguments against higher taxes for anybody, let along higher earners, and Sunder knows exactly what they are so I needn't rehearse the arguments here. There are also great arguments against unfunded tax cuts. Perhaps Sunder, as an intelligent man, would like to rehearse those with us, but I am sure that won't fit his agenda at the moment.

Sunder and his left wing friends find any sort of tax cut anathema to their very being - unfunded or not. And that's where the clear blue water is really emerging. The British people can spot political phonies a mile off. They know that all this spending and borrowing cannot be reconciled with temporary tax cuts. They see a government maxing out its own credit card, yet exhorting others to be responsible in their own borrowing. They know that in the long term there will be a price to pay for Labour's recklessness with the public finances and they are not going to be bought off with a temporary cut in the rate of VAT.

These are several issues a general secretary of a left of centre think tank should be concerning himself with (Sunder is general secretary of the Fabian Society) but Tory tax policy is not one of them. Advising Brown on how to get himself out of this mess might be a better use of his time. Or then again...