Labour's showboating grandees will wreck the economy

Telegraph

14 hours ago

Lord Kinnock has argued for a tax on private medical insurance, apparently to 'save' the health service.
Gordon Brown has been calling for higher gambling taxes, supposedly to 'fix' child poverty.
At the rate this is going, by the end of the summer Sir Tony Blair will be calling for a wealth tax, and Lord Mandelson will be starting a campaign for an exit tax on the entrepreneurs fleeing the country.
Labour's grandees are generating lots of coverage for themselves by constantly calling for a levy on something or other. But hold on. This is crazy.
Sure, we know the Labour grassroots love it. The trouble is, it encourages the belief that all of Britain's challenges can be fixed by yet more taxes – when in reality we need a smaller, cheaper, and less intrusive state instead.
Almost every day seems to bring a fresh call from one of the major figures within the Labour movement for a new way of hustling some cash from the rest of us.
Lord Kinnock, who in many ways still speaks for the soul of his party, has already called for a wealth tax, set a 2pc a year on the total assets of anyone with more than £10m.
Not content with the way that may already be encouraging the wealthy to decamp to Italy or Dubai, this week he argued that private medical insurance should be subject to VAT.
Apparently adding 20pc on top of every policy would raise the few extra billion needed to finally turn the NHS into a world-class service.
Gordon Brown, who during his long reign as chancellor turned the stealth tax into something approaching an art form, is now campaigning for extra taxes on the betting industry. Levies on online casinos and slot machines could be pushed up to 50pc, apparently, which would raise £3.2bn a year, enough to lift restrictions on benefits.
To listen to the party's grandees, the solution to every problem we face is very straightforward. We just need higher taxes on something or other.
As the Budget approaches, and the 'black hole' in the public finances grows larger and larger, we will no doubt hear calls for windfall taxes on the banks, levies on crypto trading, charges for the streaming giants, VAT on funerals, or any other fiddly tax that might bring in some extra money.
In a clickbait era, there is no question that it generates plenty of social media likes for Kinnock and Brown.
And yet, the campaigns are not just completely pointless. They are also deeply damaging for the British economy.
The proposals themselves hardly stand up to serious scrutiny. Surely we should be offering tax relief on private medical insurance, as many other more sensibly run European countries do, on the grounds that those people won't be making any calls on an already over-stretched public health service?
VAT would simply increase demand for the state service, as Labour has surely already discovered with its disastrous imposition of the extra tax on school fees.
Likewise, taxing online gambling would simply encourage people to move to offshore platforms instead, using VPNs if necessary.
It wouldn't raise anything like the amount that is forecast, and it would damage what, whether you approve of it or not, happens to be a major British industry.
Even worse, as both men should know, and Brown in particular given his long experience as chancellor, any money they raise would simply be absorbed by a state machine that now has an insatiable appetite for more cash.
Just as VAT on private school fees has not done anything to help the state sector, so a levy on private healthcare wouldn't 'rescue' the NHS, nor would a gambling levy 'fix' child poverty. A billion or two here or there no longer makes any difference to a government that now spends £1.2 trillion a year and still can't make ends meet.
But there is a bigger issue than just the campaigns themselves, even if the arguments fall apart on more than a moment of close examination. It is this. It encourages the view that every problem in the UK can be solved with yet another tax.
When the current Chancellor Rachel Reeves took office, after learning her politics from the likes of Kinnock and Brown, she naively believed that the only real problem the UK faced was that the government did not spend enough money.
If the 'grown-ups' were given the chance to end 'austerity', along with a few promises about 'stability', everything would gradually start to get better. It has turned out to be a catastrophic misjudgment, leaving the UK with a zero-growth economy that is now stuck in a doom loop of endlessly rising taxes that crush growth.
What the Labour Party really needs right now is some grandees who will tell it some hard truths.
Kinnock would be the right man to tell his comrades that you can't simply spend your way to prosperity.
Brown would be the perfect person to remind his followers that while a Labour chancellor will always want to increase spending, he or she should also make sure that entrepreneurs and businesses are allowed to flourish. Otherwise very quickly there won't be any wealth left to redistribute.
In fairness, he was always mindful of that truth when he was in Number 11, even if he appears to have forgotten it since he left office.
Instead, the grandees are show-boating, winning easy applause from the Labour tribe, while ignoring the real challenges the country faces.
It is surely clear to everyone by now that we need fewer taxes not more, and they should be lower as well – and the grandees should start to spell that out before it is too late.