Black hole

Why is Keir Starmer going on about National Insurance when you're bored of it?

As a former Labour adviser from a time when Labour didn’t win much,¹ I sometimes talk to other former Labour advisers from a time when Labour didn’t win much. All of us have done our bit, in our various ways, at losing elections to Tories who were better at this stuff than we were. All of us are now, in our various ways, a bit jealous of the people who are in there doing our old jobs at the moment.² The other day one of them texted me: “My head is so trained to assume the Tories are Very Clever that I genuinely can’t understand why they have fucked this national insurance stuff so badly”. This is, as regular readers of this newsletter are aware, basically my view as well.

Meanwhile, the lobby is, broadly speaking and with some exceptions, slightly baffled and slightly annoyed that Labour is going on about the “£46 billion black hole” in Tory spending plans caused by their decision to say they want to abolish National Insurance.

Take, for example, the coverage of this week’s admittedly non-classic Prime Minister’s Questions, in which Keir Starmer devoted most of his questions to Rishi Sunak to the issue. Here’s Tom Peck’s parliamentary sketch in The Times:

For the second session running, Starmer dedicated all of his questions to the so-called “£46 billion black hole” that is Sunak’s unfunded pledge to abolish national insurance, a pledge that is unfunded mainly because he hasn’t actually made it.

Sunak didn’t answer any of the questions, because he can’t. He can’t say how he’s going to fund a promise he hasn’t made, so these unanswerable questions are likely to keep coming.

And here’s The Independent’s John Rentoul³ in his newsletter, after calling Keir Starmer’s line of questioning “disreputable”:

But it is low politics for Starmer to pretend that this is an immediate “unfunded” objective, that would have to be paid for by cutting the state pension, or raising the pension age, or cutting the winter fuel payment, which he alleged in successive questions.

I didn’t like it when Tony Blair did it in the 1997 election campaign. Then, Labour pretended, on the basis of half a sentence in an old pamphlet by Peter Lilley, who was social security secretary, that the Tories had a secret plan to “abolish the state pension”.

It is cynical and wrong to make stuff up like this. Labour people will complain that the Tories have done much worse to them, as if that makes it all right. It doesn’t.

Labour’s attack is, we’re told, unfair because Rishi Sunak never made the promise in the first place. Well, if he never made the promise in the first place, there’s a simple way out for him. He can say “I never made this promise in the first place. I have not pledged to abolish National Insurance.” This would be a killer response. It would leave Labour’s attack dead in the water. And here’s the thing. Rishi Sunak never says it.

Why doesn’t Rishi Sunak ever say that he hasn’t actually pledged to abolish National Insurance and so Labour should stop pretending he has? The answer is straightforward. If he said that, he’d be lying, and he’d be undermining the central tax argument he wants to make going into the next election. His unwillingness to lie is commendable. His unwillingness to torch his forward offer is political.

Compare and contrast with the Tory response to Labour’s 1997 claim, which Rentoul refers to, that the Tories had “a secret plan to abolish the state pension”:

In an earlier statement, John Major said that Mr Blair's statements on pensions were “scurrilous”.

“They have made assertions that the Government has damaged the state retirement pensions,” Mr Major said.

“Yet again, they know that charge to be utterly and totally without foundation at all. In plain terms, they are liars.”

Sunak could say something like this. He never does. There’s a reason for that.

By the way, there’s a crucial error in Tom Peck’s account of Sunak’s responses. It isn’t true that “Sunak didn’t answer any of the questions, because he can’t”. He answered one of the questions, because he could. Starmer asked him about three possible things that could help to fund the abolition of National Insurance. Will it be funded by cutting the state pension? Will it be funded by raising the pension age to 75? Will it be funded by abolishing the winter fuel allowance? Sunak said no to the first question:

Keir Starmer: I do not apologise for asking on pensioners’ behalf again whether the Prime Minister will finally rule out cutting their state pension to fulfil the enormous black hole in his spending plans.

Rishi Sunak: Of course we can rule that out. The right hon. and learned Gentleman should stop scaremongering, because it is thanks to the triple lock that we have increased pensions by £3,700 since 2010, and they will rise in each and every year of the next Parliament.

That is very clear and unambiguous. But he didn’t answer the second or third questions. This is strange, isn’t it? The criticism of Starmer, above, is that the entire set of questions is based on a false premise. But Sunak’s response was not to deny the premise, but to accept it so completely that he explicitly ruled out one particular means of funding the tax cut, while leaving the other two on the table. And of course Labour has seized on this, as well they might: if you ask the Prime Minister if he will raise the retirement age and he doesn’t say no, you have a perfectly legitimate news story. 

If the defence of Rishi Sunak’s pledge to abolish National Insurance is that it’s not actually a pledge, then making that defence is not a job for political journalists, but for Rishi Sunak. And he’s not making it. He’s doing the opposite. He’s complaining about National Insurance as “double taxation” on work and saying he wants to abolish it. Here’s an email to the Conservative Party mailing list from Jeremy Hunt last month:

Here’s the deal: you don’t get to reap the electoral benefit of saying you want to do something if you’re not prepared to pay the electoral cost of saying you want to do something. It is absolutely fine to want to abolish National Insurance: it is a legitimate policy aim. But Labour is absolutely right to point out that it carries a cost - and nobody appears to be disputing the £46 billion figure they have put on it. So that gives the Conservatives a range of options. 

First, they can say that actually, on reflection, they’re not going to do it. That’s fine. It closes down the attack entirely. It also means that they can’t go into an election asking for votes on the basis that they’re going to do it. 

Second, they can say how they’re going to pay for it, and over what timescale. If your line is “We’ve got a long-term plan to abolish the double tax on work”, it is surely not unreasonable to ask what that long-term plan actually is. If it’s not a spending commitment, it’s not a plan. If it’s a plan, then it’s a spending commitment. If it’s a plan, you can say what it is. There are pretty much no changes to taxation and public spending that have no losers, and part of the cost of explaining how you’re going to pay for something expensive is that you have to identify who the losers are - or at least, that you have to provide your opponents with the material they need to identify who the losers are, and tell the losers they’re going to lose. But that’s politics.

Third, they can say that it’s such a long-term aspiration - and, critically, not a plan - that it’s not really worth thinking about for the time being. This is an option the Tories have come close to - when in the immediate aftermath of the Budget Work and Pensions Secretary Mel Stride said that “we have an aspiration to get it down” and that “It will take time. ‘Down’ covers a whole variety of different possible end points.”

But look how pathetic that looks. You can’t have it both ways. You can’t expect anyone to give you credit for a tax cut that will take, as Treasury minister Gareth Davies said in March, “several parliaments”, while wanging on about the injustice of “double taxation” and criticising the Labour Party for not being prepared to commit to ending it. If you haven’t got a plan, then you haven’t got a plan. Either this is your central tax pledge or it’s not.

When Jeremy Hunt announced, in the Budget in March, that he wanted to “end this unfairness” of “the double taxation of work”, this was the front page of the Daily Telegraph the following day:

Ask yourself: would the Conservatives have thought that this was a broadly good headline which reflected a positive outcome from their political strategy of using the Budget to announce their aspiration to abolish National Insurance, or a disastrous headline which grossly misrepresented their plans and about which it was worth putting in a very strongly-worded complaint to the editor? You know the answer to this question.

If you gear yourself towards winning headlines like this, you just don’t have a leg to stand on when the opposition’s line is “Oh, interesting, tell us more”.

I quoted John Rentoul, above, saying that “Labour people will complain that the Tories have done much worse to them, as if that makes it all right”. This isn’t quite what’s happening here. The Tories probably have done much worse to them. But what’s more relevant is that the Tories have done the same to them, and they were right to do it, and they will do it again, and they will be right to do it again. When Labour makes a spending commitment, it gets asked how it will pay for it, and that’s fine. It is being held to a high but legitimate standard, that constrains its options, and it makes its decisions on that basis.

If Labour said that it wanted, in the long term, to abolish, say, VAT, there is no world in which the Conservatives, and the media, wouldn’t ask them how they thought they were going to find the £162 billion this would cost. If Labour said that this was just something they aspired to do in the long term, to eliminate the unfairness of the “double taxation” where you get taxed once on the money you earn and then taxed again on the same money when you buy something, and that it might take more than one parliament, and that it was an important point of principle that expressed their values as a party even if they couldn’t get there straight away, and that the people who opposed it needed to explain why they loved taxes so much, they would be laughed out of the room and they would deserve it. Nobody would say that it was fine because it wasn’t really a pledge so it wasn’t unfunded. They would say it was nuts. And they’d be right.

The Conservatives have said they want to do a thing. Labour are asking how they are going to do the thing. The Conservatives are not saying how they are going to do the thing. This is going to carry on until they do.

1. I am aware that this gives you few clues about exactly when over the last century and a bit I worked for the Labour Party.

2. A bit jealous, and a bit admiring. They’re good, and they deserve to be where they are. But it would have been nice to have been up against Truss and Sunak and not Cameron and Osborne.

3. John Rentoul is a consistent and generous promoter of this Substack who always, I know for a fact, reads the footnotes, and who doesn’t mind being disagreed with. I am strongly in favour of all of these things.