October 26, 2024 - 8:00am
Perhaps the most remarkable thing is how long Labour’s “no tax rises on working people” line actually held. A masterstroke in strategic ambiguity, it allowed nearly all voters to hear “I won’t be taxed more than I already am” during the election, while offering Keir Starmer and Rachel Reeves plenty of breathing room to claim a mandate for specific tax hikes. That is, once they were safely ensconced beyond the thresholds of Number 10 and 11 Downing Street.
Could we not understand even senior royals as “working people”, in a week where King Charles carried out official engagements, made speeches and met with world leaders as Britain’s most senior diplomat at the Commonwealth Heads of Government meeting in Samoa? Semantically, yes: even the King works — though of course, the very idea of the head of the monarchy being a “working person” is derisory.
But the soundbite was always going to crystallise into a functional definition sooner or later. We are now watching ministers and journalists contorting awkwardly in a merry dance where everyone knows what the definition is actually shaping up to be: people who primarily derive their income through hours worked, rather than through returns on assets. Meanwhile government MPs desperately try to avoid calling Britain’s millions of private landlords non-working people, despite their wealth.
Starmer attempted to clarify the line with only marginally less ambiguity this week, suggesting a working person is someone who “goes out and earns their living, usually paid in a sort of monthly cheque” and who can’t “write a cheque to get out of difficulties”. Either way, we will find out for sure who counts next Wednesday, when Reeves presents her first budget.
Conspicuous by the unsubtle and looming presence of repeated non-denial-denials, it appears certain that the budget will include an increase in employers’ national insurance contributions. A tax on businesses, not working people. Except, there are thousands of small businesses run by people that are hardly hard-nosed, sharp-suited prospective investors for Dragons’ Den. Publicans, shopkeepers, hairdressers and local cafe owners are among them — as shadow deputy PM Oliver Dowden highlighted across the despatch box to Angela Rayner in this week’s Prime Minister’s Questions.
Inevitably, an increase in business costs from raising employer’s NI will result in smaller and deferred pay rises, and less hiring. It could quite reasonably be argued that this is, in effect, an indirect method of raising tax revenue from working people — and that all Reeves and Starmer have achieved in their ambiguity is complexity.
Between them, income tax, national insurance and VAT account for the vast majority of tax receipts. Ruling out each of them — while actually raising income tax by stealth through keeping income thresholds fixed — was always going to lead to fights with numerous minority interest groups, like slowly pulling off many small plasters rather than ripping off one big plaster in one go.
But it’s no use protesting to Reeves and Starmer. They’re just the doctors delivering the bad news to the ill patient. It wasn’t either of them — or indeed the public — that spent the last 14 years implementing a high-tax, low-growth system of governance.
This is all in the context of ruinous public finances and a large cohort of Baby Boomers retiring into health and social care needs. The only way out of it is economic growth, but that feels like a distant dream. Let us all hope that Labour has the intellectual and operational heft to deliver on it.
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SubscribeThere is an alternative: we could accept that the State can’t do everything that we would like it to do and that it has to be much more efficient in doing what is essential.
The state also would then have to accept a measure of people doing or providing what they need themselves – at present often unlawful and sometimes penalised.
That’s far too obvious isn’t it.
Ha ha.
This is a Government which operates by vague aphorisms rather than nuanced understanding. It has to because the Cabinet appear to be very second rate.
They’re a bunch of sixth formers. The left has never even tried to understand what it takes to grow an economy because they operate from the premise that growth=capitalism=evil. Add to this Ed Millibands Green fantasies and the future is bleaker than it has looked in my 45 years. Maybe it’s time to jump the ship and swim to safety. But where to go when the anglosphere is dominated by idiot leftists.
I know a man n France could lend you a leaky boat if you like.
Not true ! Vastly inferior to the sixth formers when I was at school.
Lots of solid second raters will find that aspersion most insultingly! If intellectual ability was measured in units of power the entire labour front bench would possess all the intellectual wattage of a dead glow-worm. They will discover very shortly that those with the broadest shoulders also possess the fleetest feet.
They don’t.
Abandon hope all ye who enter here.
Does the working class in the UK represent the same thing as in the US? And even then we’re not sure whether the working class in the US will turn on Harris and the Democrats and push Trump across the line. It strikes me that the US election and the working class is the main issue here and what happens will reverberate around the world. If Trump wins and it’s acknowledged that the working class swung in behind Trump, that they made themselves heard, what does that mean for the UK and Labour?
I think it means that the Labour government and their tied broadcasting facility (the BBC) will have to make Trump more and more into a devil. I should think that Trump would refuse to meet them anyway and they can only survive that rebuff by telling us all that Trump is an alien.
Their hope would be that our working class would be frightened by the alien and stay with the cuddly Labour Party.
Just as a point of interest/information: no, the usages are not the same, or rather the boundaries are different. Many of the people considered middle class in the US would be considered working class in the U.K.
Also if we describe someone in the U.K. as “so middle class” we do not mean they drink excessive amounts of Budweiser. 🙂
Labour is a party of the professional classes that live off the state, not the working class, and certainly not the working class in the private sector. If the opposite were true they would be taxing unearned property wealth, not small businesses.
Don’t think it means the same. Until relatively recently we in the UK had a pretty clear class system, and most people were manual workers (men mainly working in blue-collar industrial jobs or trades) who left school at 16 and got a job, and often lived in rented housing. I think the US became a more middle class society earlier if the definition includes income, education level, ownership of assets like homes.
Really good question and some useful responses below, but I’d love to see a complete discussion of the differences between “working class” and “middle class” in US and UK usage, preferably with contributors from both (all?) classes both sides of the Atlantic, because I’m not sure my (UK-based) understanding of what Americans mean is correct either, and there may also be regional differences.
Anyone have a good link to such a discussion?
I don’t understand the confusion in some of the comments here. Working class have always been the people who produced something from the physical exertion of their bodies in exchange for an income. With Unions and the growth in their industries they may have been able to increase wages above what was traditionally handed out but they remained working class. These people know who they are and do not shy away from being called working class. Many of them live in US towns that have lost this work, in some cases these towns have died. The working class have always been the backbone of both countries. It was the closure, or movement overseas, of their factories, mines, etc. that contributed to their disappearance as a presence in both countries. I don’t see how people confuse working class in the UK with the middle class in the US. Like you i’d be interested to hear from others.
I know and have known lots of people including relatives who worked in “a job” their whole lives but also of their own choice owned a portfolio of stocks and shares and competently managed such. Small beer comparatively by this means people like that will.be taxed twice over.
I don’t understand what you’re getting at.
Because of inverse snobbery in the UK a lot of people who are now doing a white collar job, which would be considered middle class anywhere else, think of themselves as working class only because their parents were working class or even their grandparents. Hence why the Labour Party has shifted to be the party of the urban middle class left wingers and the lifetime benefit recipients, while the genuine working class are now the swing voters.
That’s why we get lots of fake working class people in the UK, not to mention fake socialists – one of whom used to post all the time on here. Haven’t heard from him for a while.
I don’t think it actually would means a great deal -because the US and the UK are actually very different countries with different political systems.
We tend to overestimate the similarities because both are Anglophone countries and that we are obsessed by American culture.
Working people are those who identify as such, aren’t they?
There’s working people and working class. We all know the difference but let’s watch the meaning bent out of shape..
As a baby boomer I should point out that over half of social care costs are for under 65s. Here in gloucestershire we have two teenagers costing between them 3 million a year
Just out of interest, why does everybody use the term ‘baby boomer’ instead of old?
I realise that BB has a definition but would writers dare to say things like, “Old people are causing problems in the NHS.”?
BB sounds sort of scientific but ‘old’ sounds cruel. BB makes things too easy for the writers.
Also Baby Boomer includes those who won’t receive a state pension for another 7 years, most of whom are still working and contributing to tax, probably contributing more than they take from the state. It’s too easy for lazy journalists to use this phrase.
From memory the Baby Boomers, originally, were born between 1945 and 1955. Ten years of sudden, exuberant optimism and consequently a climbing birth rate after the war. Somehow another ten years got added along the way. I cannot see how someone born in the sixties can be directly attributed to that sudden feeling of optimism directly related to the war ending.
By definition the oldest Baby Boomer is now 78, so that leaves a large number of people older than that. I don’t know where the idea has come from that pensioners don’t pay tax. People with a good defined benefit pension will be in one of the higher tax bands; even my modest private pension attracts about £4000 of tax.
As you say very lazy.
The Americans started using it,it’s a dismissive term really,like when you are earning good money and envious people say,”money is meaningless,it’s better to be liked than have money,only crass,vulgar stupid people have money,people with no money are kind and virtuous.” Then a week later are asking for a loan till the end of the month.
We were called Baby Boomers when we weren’t old, though the term has taken off more in recent years as a disparaging term (“OK, Boomer” was a popular insult a few years back). It does seem to be a synonym for old nowadays, as you say, but I’d say it’s still pretty disparaging – rich, smug, greedy, selfish etc usually seem to be the connotations. I’d much rather just be called old.
Old = vulnerable. Whereas Babyboomer is an acceptable slur. It’s also probably assumed that all baby boomers are generally white, straight gammons.
The other thing that nobody talks about is that, in my limited experience of the voluntary sector, most of the volunteers are younger pensioners helping out older pensioners.
But I suppose it’s more the direction of travel. Over 65s account for 50% of social care. How much did they account for (say) 30 years ago? Perhaps it was the same amount.
There is an alternative way of looking at things. Let us assume we are going to get poorer and poorer in relation to the rest of the world. If that is the case, we must be self-sufficient in food and energy. Energy means warmth and power and the means of distributing food.
Self-sufficient does not mean being reliant on Li-ion batteries from China. It does not have to mean being colder in the winter – as long as it is done properly.
If we continue to see the UK as a leading country – then we will have to give money away as aid or reparations. We will also have to boast of how we are using less and less energy to give the impression that we are ahead of the world.
Giving more money away as you get poorer is silly. My grandmother would have known that.
Just out of interest, who actually gets their pay in the form of ‘some sort of monthly cheque’ or indeed ‘writes a cheque’ to get out of difficulties these days? Mildly alarming disconnect. And what constitutes a difficulty? Even more alarming ambiguity…
Whatever he wants it to mean.
But how much difficulty? Are we talking an unexpected bill of a few hundred or tens of thousands. Moreover, what a drunken aristocrat who gambled way all his money, he have trouble paying his milkman.
Would a person going through a few months of poverty be considered a working person if they had the skills to find a job earning a packet later?
It seems to me such an obviously vacuous idea that maybe I’m missing something.
Maybe he gets a monthly cheque from someone,for something.
‘… everyone knows what the definition is actually shaping up to be: people who primarily derive their income through work, rather than through returns on assets.’
This is nonsense on stilts. To derive income from assets you have to have earned some money in the first place, so that you can procure the assets. Then you have to research where to put your (already taxed) income and then manage your purchases, all the while paying tax on most of the profits. Tell me how different physically that is from the work a civil ‘servant’ sitting in an office (or more likely from home) pushing paper or tapping away on a computer.
Definition of fair.
Every new tax should hit the people who vote for it.
There a handful who live on trust funds built by their parents but in general you’re spot on
What you say is broadly true but an awful lot of people acquire the wealth without working for it. I’ve worked all my adult life, mostly in my own business, but most of what I have I owe to the generosity of Gordon Brown who quite deliberately pumped billions into the housing market in a last ditch effort to escape the consequences of a decade of his own incompetence.
Unless those assets were inherited or purchased using the profits from the ownership of other assets. Which I imagine a large amount are.
And if you can’t tell the difference between ‘hmm, what stake in the means of production should I buy’ and trading your labour for pay is then there’s no helping you.
“The only way out of it is economic growth“.
There is a very simple way to deliver growth – ditch net zero, and exploit our own hydrocarbons, and SMRs.
The price of energy is an input cost to everything, and our energy costs 4 times as much it does in the US.
It stands to reason that there must be numerous endeavours that wouldn’t be profitable with today’s energy prices, that would become so at a quarter of the cost.
Yes, agreed. But I think this is an age thing. Anyone over, say, 35 can see this clearly but the young are being brainwashed into thinking that the world is facing disaster and only the Miliband family can save us. Add the BBC which refuses to discuss the issue and fills the screen with a smirking Chris Packham and the venerable Attenborough.
The BBC are going to institute a State Funeral at Westminster Abbey for Sir David,after a two week lying in state of course. In a year or so’s time following they are going to have him proclaimed a Saint by Richard Dawkins.
Yes. Cheap energy and deregulation is the Trump formula and it’s pretty well infallible. If he becomes President the boom in the US economy that will follow will suck every penny of investment capital right out of the UK and Europe. Our only hope is to follow suit.
Plenty of coal left for at least 200yrs…..green energy? Stupid windmills will never replace oil or gas.
It is a fascinating insight into the world of Britain’s organised Right that the Conservative Party, the Daily Telegraph, the Daily Mail, The Spectator, GB News and Reform UK all assume that Middle Britain lived on trust funds invested offshore, and that those did not disincentivise work whereas sickness and disability benefits did, with those who lived on the former assumed to be the quintessence of “working people”. The Labour Party exists to manage a system based on these assumptions until the Conservatives got their act together, but on what other basis has Labour ever been allowed to hold office? There is none on which it would even wish to do so.
You may very well be a working person and an asset-holder, but being a landlord or a shareholder does not make you a working person. Nor does being retired from work mean that you have ceased to be one in a structural sense, so that you now deserved to have your Winter Fuel Payment taken away. At least in Europe, only in Britain would any of this have to be said, because only in Britain have we had 45 years, 30 of them as a matter of cross-party consensus unless you counted a Leadership that most Labour MPs actively opposed, during which these matters were presented in purely personal rather than structural terms. Both in taking their case to the Court of Session that the abolition of the universal Winter Fuel Payment had been unlawful, and in doing so on their stated grounds, Peter and Florence Fanning are obviously still members of the working class.
Firstly, from a moral point of view, there doesn’t seem much wrong with taxing returns on assets rather than income. Especially as this will hit the wealthy harder, and will in some measure limit the accumulation of wealth in a few hands, leading to long term inequality of opportunity.
Secondly, landlords do not earn money from their assets, they earn it from other peoples salaries (and work) through rent. This is in marked contrast to productive assets which actually produce something (by acting as the capital input to the process).
This is the argument of a thief.
And this is not a counter argument.
Sorry, didn’t realize it was an argument.
The counter argument would be that people who rent houses and benefit from assets do so to get revenue.
If that revenue is made smaller by taxation they just increase the rents to get the same amount.
You’re not avoiding it
OK – first principles: Prices are set by markets – they are not determined by costs (tax costs or otherwise).
If landlords could increase rents (as you suggest they would do in response to taxation) then they would do so anyway (if the market would stand it) simply to increase profits. And in fact that’s what they have been doing.
Rents will continue to go up, regardless of taxation, because we do not have a functioning housing market.
Really? When costs go up landlords can either increase the price or get out of the market. Product leaves the market until the price goes up. Sounds like a functional market to me.
“Said the joker to the thief”
There must be some way out of here?
There is. Government stops spending all the gdp and prices go down.
“Landlords do not earn money from their assets”. Of course that is nonsense. Landlords have accumulated capital, often by dint of hard work, and have invested that capital in real estate. They continue to invest in the asset by means of continual maintenance, incidently having a multiplier effect by employing agents, plumbers, electricians, etc., and continual improvement. By this service they provide accomodation and safety for people and families who have not yet had time to accumulate capital. This commercial activity generates both national wealth (totality of national assets) and revenue, mainly by means of tax both direct and indirect. Landlords do earn money for themselves but also for the common weal.
Landlords are taking an increasing share of peoples salaries. This does not help people to accumulate capital, it prevents them from doing so. I don’t know if you’ve noticed at all but young people are increasingly struggling to accumulate enough capital for a deposit.
At what point does the share of wages going straight to landlords become so high that we call it serfdom? 50%? 75%?
You may also not have noticed, but those who are buying to let, or as an investment asset, or both, are increasingly in competition with those who want to buy a house to live in. You may also not have noticed that this increasing competition from people with capital to spare, has been pushing up house prices, making them even less affordable.
If the rosy picture you paint were true, there would be no housing market problem. But there is. Haven’t you noticed?
There is only a housing market problem because of immigration. Take out the 10 million and housing would be as cheap and plentiful as it was in the inter war years.
Also take out the expansion of higher education with the increased demand for student housing; also take out the increase of single-parent families with the other parent also needing accommodation.
You are Dr Pangloss and I claim my £100
I don’t believe that I am a panglossian optimist but neither do I believe that I am a socialist miserabilist. Thus I am afraid that you don’t get your £100.
You suggest that I overlook this and that but I suggest that you have forgotten about the Rent Act 1965 and the Rent Act 1977. The primary purposes of these Acts were to create rent controls and to create secure lifetime tenancies. The consequence of this legislation was the virtual elimination of the private residential rented sector. Whether this was intended or not is hard to tell given that Harold Wilson’s government was both sly and incompetent.
The loss of the third way between public (nowadays called social) housing and property ownership gave rise to uncounted malign effects. For example, many a young person, and some not so young, were trapped unhappily in unsuitable accommodation. The start of married life, and the building of a family, was often delayed or became a frustrating, fractious event. Then, as now, waiting lists for council housing were long (there were no housing associations).
Even more important was the economically depressing effect of the inhibition of labour mobility. These Acts contributed in no small measure to the general economic malaise that sapped the life out of the country in the 1970s.
I did suffer (if that is not hyperbole) these effects myself when I tried to find a flat in Birmingham in 1977. It took eight weeks to find a one-roomed, unheated hovel of a “studio” flat in an unsalubrious part of the city.
I believe, as is obvious I suppose, that the private rental sector plays an important part in a balanced economy and society. The high rents now current reflect not so much greedy landlords but rather a failure of house building to keep up with housing needs. I leave you to decide why this may be.
I fear that our present government is about to repeat the errors of the 1965 and 1977 Acts.
Mr Morley. I did reply to you to tell you I am not Dr Pangloss and also with an explanation of my views on the private rental sector. However, it seems that Unherd have decided not to publish my response. It was in no way abusive or insulting. Ah, well.
Landlords do actually “produce”. The product is a place to live, or work. Most “pension funds” are landlords, owning property let out to residential or commercial, which includes industrial, tenants.
Labour apparently wants “investment” but is seeking to make investing unattractive for individuals, presumably wanting that investment to be state investment or corporate investment.
Regrettably neither state nor corporate investment has a particularly good record. The Great Financial Crash showed that all the experts, state and corporate, didn’t realise that bad lending, or allowing excessive bad lending or investing in the financial instruments created wasn’t terribly clever.
I don’t have a problem with taxing assets, capital gains or inheritance, as long as income tax is drastically reduced. It is really quite obvious that people are retiring early, working part-time or quietly quitting to avoid punitive levels of income tax. This is the first priority for any government.
But it’s no use protesting to Reeves and Starmer. They’re just the doctors delivering the bad news to the ill patient. It wasn’t either of them — or indeed the public — that spent the last 14 years implementing a high-tax, low-growth system of governance.
the ultimate cop out-they might not be “responsible” but they are now and the likeliehood is that if most of the prognostications are correct,its going to get seriously worse and very quickly.
Hilarious! If the UK is dependant on labour delivering economic growth then the game is already over. Poverty awaits.
By “working people” they mean people in the public Sector and those who have no seizable savings or property. I imagine that the lack of taxation will continue to protect the black economy and criminal classes from any kind of scrutiny, law enforcement or taxation. This is where the drive for growth is laser focussed – that and the charito-quangos. Those Lambos, Audis and armoured Range Rovers don’t buy themselves.
Almost forgot the Net Zero entrepreneurs who hose up taxpayer subsidies by the million and give proportional donations to the Labour Party as a quid pro quo.
From recollection the Right first used the ‘working people’ phrase, and with the implicit criticism of those not working.
However there is some truth in Starmer/Reeves are now stupidly hung by their own petard. The fear of what happened in 92 made them ultra cautious, but arguably the Village idiot would have won the July election given how bad the Tories were perceived and they could have held off such explicit promises on the forms of taxation they would not increase. They are where they are now though and a complex navigation needed. The key judgment is in 4+years time not now. The Right of course clueless as to what it would do having created the mess but that will not stop some criticism from that quarter which is legit part of democracy.
It’s really very simple. Idle and overpaid “public servants” with secure pensions and very comfortable working conditions whose organizations are dominated by the Trade Union Barons who bankroll Sir Freegear-Twotier are “Working People”…everybody else is an evil capitalist plutocrat, who is in all probability also a wicked racist gammon without a woke thought in his or her brain (and if her, definitely doesn’t have a p***s)…who would sooner walk over burning coals than attend a modest week-long DEI “workshop”…
…even if she is a frugal granny living off her state pension, made slightly more comfortable by she and her late husbands modest savings…who will miss her winter fuel allowance because it made things a bit cosier when her children and grandchildren popped in over Christmas…