Polly Toynbee

Telling truth to power in a democracy is quite easy, though power may not listen. But for those holding power in a democracy, telling truths to the people seems to be virtually impossible. The indisputable facts emerging from post-budget analyses are that Britain must either pay considerably more tax, or agree to public cuts more savage than any seen yet. But the parties dare not tell the people.

Theresa May, writing in the Mail on Sunday, promises a “brighter and more prosperous future for everyone in the UK”. But she did not hear the post-budget lecture by the Institute for Fiscal Studies director, Paul Johnson, which was a litany of woe, warning of worse to come. He painted such a dark portrait of how we live now and what awaits us that anyone with small children might hurry to emigrate. Johnson, no wild futurologist, but a respected analyst, addressed a room full of distinguished sociologists and economists: none challenged his hard choices.

“Politics is in turmoil,” he said. “So is the economy.” Look what has befallen us since the crash of 2008, he pointed out: the country is 14% poorer than it would have been on its previous trajectory, so £300bn has gone missing. The economy is over 2% smaller as a result of the Brexit vote: that’s £40bn less. Overall, that amounts to an average £6,000 per head.

So Project Fear was essentially right: we have fallen to the bottom of the G20 in terms of growth. Compared with a rapid escape from all previous recessions, this long trough is “a disaster”, said Johnson, a record-breaker. UK business has stopped investing, at “virtually zero”, compared with business investment at 8% in Germany and the US.

Earnings are still below 2008 levels. A fifth of workers earn below the £9 national rate set by the Living Wage Foundation, before George Osborne stole the title for the government’s lower rate – now £7.83. Two-thirds of FTSE 100 companies don’t pay the real living wage, while their chief executives earn 129 times more money than their average employees. As Johnson says, wage stagnation began long before the crash: “We should have made much more noise about it sooner.” Endemic low pay means a third of households will depend on universal credit – a third earning too little to survive, costing £60bn a year. That defines a dysfunctional economy.

Income inequality that shot up in the 1980s has never come down again. The one good historic change is that pensioners as a group are now the least likely to be poor, after Labour’s pension credit lifted a million out of poverty and the Tories triple-locked their pensions. But the young, by the same token, are doing worse than previous generations – itself another historic dysfunction. Thirty years ago, 80% of 35-year-olds owned their homes; now that’s just 33% – and virtually none have the defined-benefit pensions that so enriched today’s over-65s.

This austerity has seen cuts “unprecedented” in our history, says Johnson. But much worse is to come unless we change our ways. Assuming we want to keep present standards – not improve them but just maintain them – then on Office for Budget Responsibility reckonings, by 2068 nearly a quarter of our spending will be on the NHS, pensions and social care. This isn’t a guess, because the people who will need that care and those pensions are alive already. That means everything else will have to be severely cut back – or tax must rise to pay for it. Borrowing more is certainly possible, especially for investment. But paying more tax for services is the irreducible choice no politician dare put to the people.

May dipped a leopard-skin toe in the water when she first announced her £20bn for the NHS: people would have to pay “a bit more” tax. But, as over national insurance during the election, she backed off and the NHS extra in the budget came with a tax cut instead. She threw away the chance to open an honest debate: you get what you pay for. Depressingly, Labor promptly backed this most distorted tax cut for the rich. Yet the time was ripe with the NHS a popular cause: NatCen shows a 15-year high in willingness to pay more, at 60%. Britain Thinks finds 64%, Ipsos Mori 66% – and all show Tory as well as Labor voters in favor. If not now, when is the right time for straight talking on tax?

Due to the misguided raising of thresholds, a remarkable 42% of people now pay no income tax – the fairest tax in a grossly unfair system. The poor pay the highest proportion in VAT, the rich virtually escape council tax on un-revalued property. Every aspect of our system is riddled with loopholes – warped, perverse and distorted. Failure to tax inheritance is multiplying wealth inequality. Everyone knows it, but no party dare touch it. Labor has no plan for fundamental reform. It’s good to take more from the richest – but without raising the basic rate, nothing like the sums needed can be levied.

This inability to raise tax is a fatal British political disease that has lasted since the war. Even in 1950 we raised far less than similar countries and the gap has remained. The Resolution Foundation points to OECD charts on tax take, showing how much less British people pay. The 2016 figures show us well below the OECD average, and miles below similar countries: Belgium pays 44%, Denmark 46% and France 45% – the UK pays just 33%.

To stay civilized, to recover from austerity and raise standards, we need to pay a lot more tax than we are used to – and that’s most of us, not just businesses and the rich. Should parties just lie and only raise tax once in power? If no party daring to tell this truth can ever be elected, what’s to become of us?

 References: the guardian