Newsletter #62: Income tax not to rise, after all that...

PLUS: BBC bias barks up wrong tree; and Without McSweeney, what's left of Starmerism?

Good morning.

This week, we discuss Labour’s u-turn on a policy that hadn’t even been announced, Morgan McSweeney’s strategic missteps, and question whether ‘neutrality’ is even possible for a news organisation in the twenty-first century.

This newsletter’s agenda: Without McSweeney, what’s left of Starmerism? (free); Income tax not to rise, after all that… (paid); Yes, the BBC is biased, but right-wingers make a conceptual error when they complain about this (paid).

Without McSweeney, what’s left of Starmerism?

Less than eighteen months since Labour was elected with a huge 174-seat majority, Keir Starmer’s government is floundering and running out of political steam. Of course, this will not come as a surprise to readers. Contrary to popular opinion, (Sir) Keir Starmer (KC) isn’t bereft of ideology, but is rather a deeply ‘conservative’ (in the literal, not political sense) man of the establishment who is basically happy with Britain as it was configured in 2024, who doesn’t really know what do with his time in office when he’s not arresting political opponents or stuffing his face with McCoy’s crisps. It’s not an easy time for a man like Starmer to be in charge.

Following an already difficult month, in which the government has been forced to contend with near-constant leaks and u-turns over the upcoming Budget alongside almost daily stories on the Prison Service’s impotence at preventing the accidental release of violent criminals, Starmer now faces the prospect of losing his oldest and most important adviser: Morgan McSweeney.

McSweeney is widely believed to have cleared (if not initiated himself) several ‘unauthorised’ No 10 briefings attacking Health Secretary Wes Streeting, one of the few Labour ministers with any remaining credibility, for allegedly planning a coup. Streeting, who must be the most self-promoting Cabinet Minister we’ve seen since Matt Hancock’s egomania during the pandemic, is clearly very ambitious. His main difficulty is that the Labour membership hates him, meaning he is unlikely to credibly challenge Starmer unless he somehow took charge without a leadership contest — but this may not be enough to stop him trying. (Also, Streeting may well lose his seat at the next election, though he’s hardly the only senior Labour figure that this applies to.)

So Team Starmer being suspicious of Streeting is not insane. But unfortunately, it seems McSweeney foolishly moved pre-emptively in an attempt to destroy Streeting before his leadership challenge could begin in earnest. Some sources claim that the attacks were triggered by someone registering the ‘wesforleader.co.uk’ domain; Streeting and his team deny any involvement, and it is more than possible that someone was either making mischief, or looking to sell the domain at a later date.

Many in the Parliamentary Labour Party, including most Starmer loyalists, have long felt that McSweeney has been too clever for his own good, and that this disastrously botched attempt to flush out an as yet non-existent challenger is simply the final straw.

It’s difficult to emphasise how big a loss McSweeney would be for Starmer. He is no political mastermind — he succeeded in purging some of the most naïve people in General Election election campaign in decades — but he is one of the very few people left in the Labour Party who believe it should be ruthlessly committed to reducing immigration, crime, and the cost of living in order to secure reelection, rather than indulging its own hobby horses on these topics.

So, having already lost Sue Gray, Angela Rayner, three communications chiefs, and his principal private secretary inside his first year, Starmer now seems likely to lose the one adviser who at least dimly grasps how Labour could win the next General Election.

But given much of the intellectual energy behind Starmerism has come from McSweeney, what would a Starmer government after McSweeney even look like? Well, one clue came this week: Work and Pensions Secretary Pat McFadden announced that he intends to take another look at the decision not to compensate nearly three million ‘Waspi women’, who bleat that they weren’t given sufficient warning that their pension age was to be increased from 60 to 65, ruining their delicately-laid retirement plans. Not even a policy: just consultation.

It is, in truth, an unmistakable glimpse of what Starmerism will look like with even less central authority: dithering, terrified of its own backbenchers, and paralysed by whichever stakeholder group is shouting loudest this week.

—Christopher Bright Deputy Editor, Pimlico Journal

Income tax not to rise, after all that…

In our previous coverage of the upcoming budget, much like everyone else we were writing under the assumption that Rachel Reeves was going to raise income tax, thus incontrovertibly breaking one of Labour’s manifesto pledges. OBR forecasts were suggesting that she had to raise as much as £30bn in order to remain within her ‘fiscal rules’, and increases to other taxes that could possibly raise this much revenue — corporation tax, national insurance and, above all, VAT — had seemingly been ruled out. So income tax it was. It wasn’t yet confirmed, but Starmer refused to stand by his manifesto pledges in the Commons — so it looked like it was confirmed… until it wasn’t.

The lead-up to the budget has been all-consuming. One aspect of this is that there have been an unprecedented number of leaks, thus giving the media something to talk about. But what’s more remarkable is that it seems as if virtually all government business has totally ground to a halt. Some kind of government slowdown is normal, but this is unprecedented, both in length and extent.

The original understanding of the Chancellor’s plans was that there would simply be an increase to income tax, including (but not limited to) the basic rate. Later emerged the so-called ‘2 up, 2 down’ plan from the Resolution Foundation, which sought to square the circle by making the plan more redistributive while arguing that it was — at least arguably — more compliant with Labour’s manifesto pledge on not raising taxes on ‘working people’ (as pensioners and landlords, among others, would be hardest hit by such a scheme).

The general reaction to these two plans in the media sphere was not especially negative, at least if you exclude those who were bound to be negative no matter what Reeves decided to do. In general, tax specialists like income tax and VAT, as these are generally considered the two least distortive taxes that would plausibly raise sufficient revenue for Labour’s purposes. VAT was unlikely to be increased due to its reputation in Labour Party circles as a ‘regressive’ tax — so income tax it was. Such a path, while breaking Labour’s manifesto, was seen as preferable to the so-called ‘smorgasbord’ approach of increasing a wide variety of less individually significant taxes, many of which are highly distortive. For many, these plans seemed like the most likely to strike the right balance between achieving fiscal consolidation, growing the economy, and satisfying backbenchers and voters. And, in my view, they weren’t far wrong in saying this — so long as the black hole remained as big as £30bn.

In fact, a number of commentators urged that, if Reeves was already going to break manifesto commitments, she might as well go further and raise even more money than she actually needed — so as to avoid having to go back again for more. This is the kind of argument that sounds like it makes sense, but doesn’t in reality: the additional money would spur more demands for spending from your incontinent MPs, soon putting you back where you started. But more on the strange psychology of these commentators below.