Voters like the spirit of Sunak’s tax-hiking Budget, not its detail

If it means maintaining the sense that we’re all in this together then people will accept a hit – for now

After a day of horrendous front-page headlines about tax grabs, opinion polls showed a large majority in favour of the Budget. No fewer than 52 per cent of respondents approved of it and only 12 per cent disapproved in an Opinium survey. Even more notable was that 65 per cent approved of freezing personal tax allowances and only 22 per cent disapproved. After another day, polling by YouGov gave the Conservatives a 13-point lead over Labour, up four points from the previous week, so this was not just down to the successful vaccine programme. In fact, the Budget was a documented factor in this result: 55 per cent of respondents described it as “fair”.

How could the threat of the highest tax take since the 1960s be so widely welcomed by an electorate that would once have relied on the Tories not to go down that road? This column has cast considerable doubt on opinion poll data in the past, regarding many of its findings as simply a reflection of what the media have told people they ought to say. But in this case the opposite appears to have been true: people were saying the precise antithesis of what the media had advised them to think. How can this be?

This phenomenon is particularly alarming to those who believe that the chief economic lesson of the past generation has been the damage caused by high taxation both to economic growth and to the personal self-determination that thriving private enterprise permits.

Has everybody – including the present team of governing Tories – forgotten the revelation of the Thatcher years? That not only could low-tax policies effectively revive a declining national economy but they could prove to be almost unbeatable in elections. Indeed, the 1992 general election, which Labour was so confident about winning that it staged a victory rally in advance, was spectacularly lost thanks to the open admission by its chancellor-in-waiting, John Smith, that he intended to put up taxes as soon as he took office. (The Tories campaigned, very successfully, on the warning of a Labour “tax bombshell”.)

So what is going on here? The most depressing analysis is that a younger generation of voters, for whom the days of confiscatory tax levels and the penalising of enterprise are mythical beasts from an archaic era, simply do not appreciate the consequences of what they have agreed to unleash. But, frankly, I doubt this.

There is a misunderstanding, I think, about the reason for the huge popular support for Thatcherism in its glory days. Margaret Thatcher herself, and the team that supported her, may indeed have been students of Hayek (Keith Joseph famously distributed copies of his seminal text, The Road

to Serfdom, to the Cabinet), believing that the lowering of the tax burden on business and on individuals was an essential step in the spread of prosperity and individual responsibility. This view was embraced with considerable enthusiasm by great numbers of working-class people who would never previously have considered voting Tory. The age of High Tax-Big State paternalism was thought to be over – and this shift in voting patterns was so profound that Labour had to reinvent itself to embrace the new expectations.

But fiscal policy was not the chief reason that Mrs Thatcher, as she then was, proved unbeatable in general elections. The country had become largely inured to the predations of high taxation: in 1979, tax cuts seemed like a remote dream, rather than a practical possibility. What drove voters to her and her party was the immediate emergency: the need to break the protection racket that the trade unions, with the collusion of the Labour Party, had comprehensively imposed on the population.

No one who did not live through the 1970s can imagine the extraordinary, suffocating grip of the unions, which controlled virtually all of the services essential to normal life – transport, gas and electricity supply (even the sale of household appliances), telecommunications and the press, plus local council provision of refuse collection, road maintenance and, of course, schooling. Not to mention the major industries: car and steel production and, most notoriously, coal mining. Any or all of these things, which were necessary parts not just of the economy but of everyday existence, could be (and frequently were) shut down at a moment’s notice by union bosses, who could call official or unofficial (“wildcat”) strikes without legal constraint.

Governments had been judged throughout the 1960s and 1970s on how they managed to cope with this impossible dilemma: Edward Heath’s Industrial Relations Act collapsed in ignominious failure. Harold Wilson was elected to office on the promise that he could reach deals with the union bosses over “beer and sandwiches” at No10. In other words, by agreeing to share power with them.

It was this desperation – the realisation that the country had become ungovernable – that drove voters to Thatcherism. They may have benefited from the tax cutting and deregulation in the medium and long term, but it was not the principal appeal. The overwhelming mood of that moment – if you are too young to remember it, ask your parents – was rage and despair, and the sense that if the tyranny of the unions could not be broken, the country was finished.

So it is that more amorphous thing – the mood of the moment – that is at the heart of electoral success, and that is what Chancellor Rishi Sunak captured this week. When he described the national character that has seen us through the pandemic as “determined, generous and fair”, he implied that his Budget was framed in the same spirit – and the voters liked that idea. Because the one good thing that most people believe has emerged from this terrible year is a sense of community, of the importance of just those qualities of generosity and fairness.

That is why, for the moment at least, they are prepared to accept the prospect of higher taxes if that will help everyone to come through this with as little damage as possible. They believed that government message, “We’re all in this together”, and, for a while at least, that is the way they wish to continue.

How could the highest tax take since the 1960s be so widely welcomed by an electorate that would once have relied on the Tories not to do that?