Reading George Parker’s round up of the shadow Chancellor’s recent public statements , it’s pretty clear that Labour’s economic strategy is currently about making as little disturbance as possible as their boat glides smoothly on its way.
Reeves confirmed Labour had “no plans for a wealth tax”, ruling out higher levies on capital gains and property income, as she stepped up her party’s wooing of business and wealth creators.
she told the Telegraph over the weekend
“The government said they needed to raise £12bn and I said, well, why do you always have to come to working people and ask them to contribute more?” Reeves said. “I don’t have any spending plans that require us to raise £12bn worth of money. So I don’t need a wealth tax or any of those things.”
she told the FT in May she had
“no plans” to equalise capital gains tax rates with income tax, or to cut tax breaks on pension contributions for higher earners.
Will she now rescind her avowed intent to reverse the scrapping of the Lifetime Allowance? That may be a red line for a party that is finding the gains made by Momentum reversing faster than the Spanish Football Federation.
When no policy is the best policy
The country seems to have accepted most of the policies put in place by Sunak and Hunt since the aberrant Kwasinomics that hit us this time last year.
The demise of this Government won’t be because of what it’s done, but because of the way it goes about its business. Providing a more politically acceptable version of the current economic and fiscal policies seems to be a better bet than coming up with anything new.
So many of the supposed threats of mansion taxes and overt rises in income tax have been dispensed with. The stealth taxes – including the freezing of tax thresholds in a highly inflationary period, can be baked into a future Labour Government’s strategy, allowing it plenty of opportunity to be seen to giving back in other areas.
It’s smart as it plays well to the innate hesitancy about change that makes it much harder for a single opposition party to secure genuine regime change.
For Labour, the nightmare scenario is to find itself isolated, as it was in 2019 , from its voter base who are alienated by policies that they didn’t trust.
Is there still conviction in the Labour party?
I suspect that the parliamentary Labour party has painted the policy book beige with a view to getting into power.
They have two ways forward if they achieve their goal. One is to revert to “wealth redistribution” that is now associated with “beggar my neighbour”, the other is to implement the growth strategies put forward by the current Government, the most relevant of which to pensions are the Mansion House Reforms.
It would be ironic indeed if the country voted in Conservative policies to be put in place by a “competent” Labour Government. Ironic but quite likely! We have seen in pensions a long list of good policies that simply haven’t happened; witness
- the pensions dashboard
- 2017 AE reforms
- small pot consolidation
- a VFM framework
- the DB funding code
- DB consolidators
- Increased investment in alternative growth assets (illiquids)
The Labour party has its manifesto written for them by the Conservatives, Labour just needs to be a little more disciplined and a little more competent in getting those policies over the line.
Fifteen years (five good – ten less so)
By the time we get a new Government, Labour will have been out of power for 15 years. Looking back, the first five of them were characterised by progress in our world of pensions. Auto-enrolment, better value from DC pensions and a simpler stronger state pension. But since the demise of the coalition , nothing positive has happened – with the exception of the implementation of a TCFD framework.
The most exciting thing that has happened in pensions has been the blown engine we suffered last year when LDI over-heated and saw £500bn+ wiped from corporate DB balance sheets , nearly wrecking the Government’s ability to borrow in the process.
The LDI fiasco was avoidable , but an incompetent and complacent Government , informed by a dozy Regulator – actually encouraged it. Once more , the damage has been done on the Conservatives watch,
So we might think that pensions has much to gain and little to lose from regime change, especially with the blueprint for progressive reform , having been written.
But we await to see the emergence of any Labour politician who has shown the passion and capability to make things happen. We have not seen that since we lost Steve Webb in 2016.
Webb could still be made a member of the upper chamber and run pensions from there, but I think that unlikely. Right now we seem to have everything in place but a fixer. We should be grateful that we are likely to see policy continuity whatever the next Government is. But we cannot continue to see the failure to implement the policies we have been working on so long, we need action.