The more times Rachel Reeves invokes ‘working people', the more reason there is to be scared

Yahoo

26-03-2025

I lost count of the number of times the Chancellor referred to 'working people' and reiterated how central their interests were to the Government's concerns. Presumably this is an abbreviated version of 'working class people' – a term which now sounds too sectarian and quaint for a modern population.
But she could not possibly be including in this revered category the people who earn north of, say, £150,000 per year but who certainly do work for that income. So it is some working people who are deserving of compassion and favour but not others. And none of them, whatever their level of remuneration, were going to get what they certainly want most, which is a reduction in their taxes. Because the Government needs their money more than they do. That basically was the theme.
Her principal goal was to make more people work for a living rather than relying on welfare benefits – or, as she put it, to 'help them into work'. This was to be accomplished by a programme of Personalised Employment Support which will, one must assume, involve a new fleet of public sector employees to do the supporting, which seems to run counter to the Government's objective of cutting the numbers of public sector staff. She did not acknowledge the obvious truth which is that far more people would be prepared to come off benefits and go into work if the basic tax threshold was increased to, say, £20,000 per year thus making it worth their while to be in paid employment.
Of course, at the moment, the Government cannot reduce taxes for anybody. Not only do they have the debt problem which they insist was the fault of the previous government but they are having, for obvious reasons, to increase spending on defence. (Indeed, the most plausible thing that Ms Reeves said was that the expansion of the defence industry would be likely to contribute to economic growth.)
So the conundrum remains: if income taxes remain punitively high, there will be less incentive to seek employment. With more people (quite sensibly) remaining on welfare, the Government cannot significantly reduce its expenditure and so taxes must remain high which will continue to deter people from seeking employment. As Art Laffer once said, 'If you pay people to be poor, you will get more and more poor people.' So the Government stays broke and productive employment does not increase.
The traditional Left-wing solution to this – still being propagated by the Corbynite wing of Labour – is to increase tax on the accumulated wealth of 'the richest'. It does not seem to occur to them that rich people do not put their wealth under the mattress: they either spend it or they invest it, both of which contribute directly to economic growth.
Message to Labour: you can stop using the term 'working class' but your thinking will have to progress further beyond the old socialist shibboleths if you are to provide any substantive solutions to this dilemma.
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