Under Blair, the Labour Party turned its back on hardcore socialism, class war and traditional tribal politics, becoming instead a more centrist, social-democratic party committed to social mobility, wealth-creation and enterprise as much as redistribution and increased spending. That shift was almost as important as Thatcher’s takeover of the Conservatives and her transformation of Britain’s economy and society. A new, post-1979 settlement emerged for Britain: for the first time since the 19th century, both government and opposition supported variants of capitalism; both parties accepted that private enterprise, free trade and personal ambition were the driving force of progress; both increasingly blurred the line between the state and the private sector when it came to delivering taxpayer-financed health, education and welfare.
This consensus, which crumbled as Blair lost control of the domestic agenda years ago, and ran into trouble when Gordon Brown became prime minister in 2007, is now officially over. Ed Miliband, Labour’s new leader, proclaimed the death of New Labour yesterday; his policies are as incompatible with Blairism as they are with Thatcherism. He supports high tax not primarily because he thinks it will raise revenue but to punish the better-off. Ken Livingstone wants to go even further. Even though bonuses are already mostly taxed at a marginal rate of 51.5 per cent, Miliband wants to increase the bank tax, reintroduce a bonus tax and slap a Tobin tax on financial transactions. He believes in the need for the government to regulate pay levels in the private sector. He supports a new graduate tax.
While some of this is inspired by the bank crisis, most of it isn’t. Financiers are being singled out – but all private firms are being hit, all entrepreneurs targeted, and nobody who is trying to work hard to better themselves, buy a larger house or educate their families will be safe from the onslaught. This is as much an anti-capitalist, anti-business and anti-wealth agenda as it is narrowly anti-City. All the old divisions will reappear, all the old voting patterns, all the old class-based hatreds.
There is no place in Miliband’s intellectual framework for the idea, shared by Thatcher, John Major and Blair alike that too much tax and too much red tape is counter-productive, reduces effort and investment, chases away capital and talent, impoverishes the nation and destroys the public finances. Instead, to Miliband, the private sector can be taxed and beaten and throttled – and it will always come back for more. This view of the world is shared almost entirely by the coalition’s Vince Cable wing. The two men appear to agree on everything apart from the budget deficit, about which Miliband is in denial.
The opposition hates the City and wants to tax everything that moves; Cable agrees; the Tories are too scared to resist. The public, which has not been exposed to a proper defence of capitalism for years, wants to lash out. It is therefore becoming increasingly difficult to remain optimistic about Britain’s long-term future. I hope I’m wrong, but I fear for the UK’s jobs and prosperity.