The Spectator's Notes | 29 November 2008

In his speech announcing his Pre-Budget Report, Alistair Darling said that he was going to put up the top rate of income tax to 45 per cent from 2011, because he wanted the burden to be borne by ‘those who have done best out of the growth of the past decade’. This was not only, as many have said, an abandonment of a New Labour article of faith about tax rates: it was also an admission that the past ten years have not worked. The Blair/Brown view was always that the purpose of holding the top rate at 40 per cent was that this, by increasing general prosperity, benefited ‘the many, not the few’. Now the Chancellor is saying that it did not, in which case what, or rather, whom, were those ten years for? I think, though, that the rate rise will damage Labour more than it thinks, for two reasons. The first is that the dogma that tax should be punitive is now back. Many people, even people who are not rich, really hate that idea, and see it as discouraging their own efforts. The second reason is that almost all the people in the media who form public views on politics will be in the new 45 per cent bracket. For example, Mark Thompson, the Director-General of the BBC, is paid £816,000, so he will now have to produce an extra 5 per cent on £666,000 of his income, which is £33,300 a year, the equivalent of annual private day-school fees for two of his children.