POLITICS
07/09/2021 21:59 BST | Updated 07/09/2021 22:45 BST

Will Boris Johnson Defy The Odds Again With His Tax Hike Gamble?

Big risks, but possible big rewards as the PM uses Covid to wriggle out of broken promises.

Toby MelvillePA
Johnson, Sunak and Javid.

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For more than 18 months, we’ve been used to Boris Johnson leading his “Three Amigos” press conferences alongside Chris Whitty and Patrick Vallance. But at the latest No.10 briefing, a new live TV trio was in town.

And the line-up of the PM, Rishi Sunak and Sajid Javid was very visible confirmation of a serious gear shift in Downing Street, moving from the daily emergency of the pandemic to its long-term impact on our health, our economy and, yes, our politics.

It was certainly audacious. Johnson openly admitted he was breaking his 2019 manifesto promise not to raise taxes. Yet he tried to make a virtue out of necessity, claiming it had all been forced on him by the pandemic. Judging by his ebullient tone in both the Commons and in his press conference, he thinks he might just get away with it.

His buoyant mood was obvious early on. Standing behind the Speaker’s chair during Treasury question time as he waited for his big moment, Johnson listened to Angela Eagle lambast him and Sunak for breaking promises on overseas aid, the tax lock and the pensions triple lock. When she asked “why should any voter believe ever again that a Tory manifesto promise is worth the paper it is written on?”, the PM simply smiled a broad smile.

And the sheer lack of Tory backbench opposition that followed, underlined just how he had once again bamboozled his critics. Earlier, some of the Cabinet expressed unease over the plan but none felt strong enough to resign on principle. Politicians whose life’s mission has been to cut taxes in the end realised they couldn’t stop the combined Johnson and Sunak juggernaut.

On a tactical level, it turned out that No.10’s lack of pitch-rolling was actually a cunning plan to get the bad news (the tax hike) out first, then produce the good news (pensioners would pay NI, a higher dividend tax would hit the rich) as a surprise to quell any rebellion. Staging a lightning vote on Wednesday, before rebels had time to organise, was another smart move.

Putting the NHS alongside social care in the new levy, and frontloading the billions raised for the NHS, was shrewd political branding. It’s so shrewd that Labour may worry about voting against the NI rise, given it can be pitched as “voting against £36bn for the NHS” as much as “voting against a £12bn tax bombshell” – unless they come up with an alternative beyond vague references to a wealth tax.

Most potent of all however, at least in the eyes of some MPs in both parties, was the sheer force of Johnson’s big strategic argument that the pandemic had created the political space to tear up all the usual rules. Whether that’s a valid justification or a lame excuse, the coming weeks and months will decide.

Johnson loves wrapping himself in the Union Jack, but this is all about wrapping himself in a protective suit of “Covid Covid Covid”. You used to say National Insurance was a ‘jobs tax’? Ah, but Covid means we’re in an emergency. You used to say you’d never raise NI? Ah, but Covid. You broke your promise to pensioners, on overseas aid? Ah, but Covid.

As a result, the mooted Tory backlash was the dog that didn’t bark. Only one MP, Richard Drax, dared criticise Johnson to his face. Only one MP, Stephen McPartland, dared tweet the lack of immediate funding for social care and the inherent problem of a jobs tax. Even Marcus Fysh, the backbencher who slammed the plans on Sunday, was reticent, not least as the PM jibed that he’d been “reading his brilliant contributions on WhatsApp”.

But when Johnson talked of the “deafening silence” in the chamber, he was actually referring to Keir Starmer’s lack of an alternative. Using a classic political judo throw, the PM said it was ‘deeply irresponsible’ of Labour. Johnson, who himself had no plan for social care for two years despite claiming he had one “prepared” on the steps of No.10, actually told Starmer “plan beats no plan”.

In fact, the best Tory MP question came from traditionalist Christopher Chope, who asked if there had not been a pandemic, “how would we have funded this reform of social care without having to raise taxes?” SkyNews’s Beth Rigby tried later too. Neither were given a straight answer, mainly because it’s obvious that in December 2019 the PM had no idea how to fund his manifesto pledge on social care while simultaneously pledging not to hike key taxes.

The problem for Starmer is that until Labour are seen as trusted with voters’ cash, any attacks on tax rises are unlikely to land effectively. New Labour made hay with ‘22 Tory tax rises’ in Opposition only because Gordon Brown was seen as trusted on spending. Johnson has already done his ‘Nixon in China’ moment, jacking up borrowing in a way Labour currently couldn’t. Hiking taxes seems the logical next move.

In some ways, the new levy is a gift to Labour as they can from now on use it to pick and choose how much it should increase, rather than argue the principle itself. They may well target the rich more than this government. And come the next election, they could tweak the levy to spend more on either social care or the NHS.

The biggest danger of the plan will be if it inflicts a tax hike on millions and yet doesn’t solve either the NHS or the social care problems it claims. Already NHS bosses have said the cash does “not go far enough” and mean that the “threat of long delays will remain”. Just as with other No10 press conferences, you know it’s time to worry when the PM says “I have to level with people”. Previously that was about Covid deaths, now it’s “waiting lists will get worse before they get better”.

Labour MPs privately admit one major mistake at the last election (among many) was to claim the NHS was somehow being sold off to Trump rather than to focus on the daily reality of bed shortages, staff shortages and growing waiting lists and waiting times. It was telling that Javid couldn’t say today that even this cash injection will clear the 5 million waiting list backlog in three years.

When Johnson said that social care was “our national priority”, the care sector uttered a hollow laugh given the lack of urgent funds or forecasts of future cash. Many will remember catch-up schooling was his last personal priority, and that failed to yield the cash many wanted.

The Tories’ record matters too. Sunak said the NI rise was at least not a stealth tax, but the biggest stealth cuts over the past decade have been to local councils and to the social care they were expected to deliver. The lack of actual urgent cash for the care sector, after years of being underfunded by the Conservatives, could still take the shine off today.

Yet the worrying thing for Starmer will be the way Johnson is pitching himself as the “progressive” on taxation (backed by one IFS verdict at least), camping firmly on the apparent centre ground. He’s already delivered the biggest peacetime state subsidy of wages in the pandemic, now he’s creating what Sunak rightly said was a “permanent new role for government” with permanent spending too. It will be hard to paint that as right-wing or Thatcherite.

In many ways the package outlined today could easily be imagined being deployed by Blair and Brown in their heyday (in fact they did their own NI rise), not least the tweaks to dividends and the blending of NHS and social care into a spending plan that straddles the next election. Helping the poorest to avoid paying anything at all, protecting some homeowners’ assets and creating certainty and reassurance of a maximum £86,000 care bill to plan for, are all pluses.

The fact is that the “greased albino piglet” (copyright David Cameron) has shown over the years he can wriggle out of problems other politicians cannot. Today’s pension lock promise breach was smoothed as “a statistical anomaly” – yet Gordon Brown was hammered for a similar anomaly that triggered complaints about a 75p pension rise. Johnson has also got away with broken election pledges on aid cuts and armed forces cuts.

Crucially, the economy is doing better than expected and I wouldn’t be surprised if the OBR windfall in the autumn is somehow used to take the edge off tax rises for the lower paid.

The PM will be battered by some newspapers for his mere “emotional commitment” to not putting up taxes. Yet the bigger prize would be a reputation for doing difficult, unpopular things in the name of financial responsibility. If he can also convince the public he’s finally getting serious about a serious issue that affects many of us, he may have the last laugh.