Tax and public services – let’s be honest
Nick Hopkins, a Labour activist in Glasgow, says Labour needs to get honest about tax.
If Scottish Labour can’t be honest about tax, with ourselves and with others, the prospects for social democracy in Scotland and the UK are grim.
Sometimes as a researcher you have a conversation that brings you up short. A couple of weeks ago I sat in a draughty canteen in a Scottish hospital opposite Fiona*. A bit younger than me, Fiona was in hospital looking after her daughter. Fiona described her life to me completely without self-pity, making the challenges I face bringing up two healthy children pale in comparison.
Two years ago her daughter Cara picked up an infection. Within a couple of days she was in hospital fighting for her life. The damage wrought by the infection left Cara doubly incontinent, hearing and visually impaired, and needing both 24 hour care and daily hospital treatment.
Fiona was without self-pity, but she was aware. Aware of her own tight circumstances and that the state financial support available to her would have left her in poverty without Cara’s father’s small contribution. Aware of the unlikelihood of ever returning to her previous reasonably paid work in marketing.
Fiona was also angry. The treatment Cara was getting from the NHS was excellent, but after months of fighting, she still lacked an adequate care package from her local authority. Cara doesn’t fit standard categories, no-one seems to want to take responsibility to sort the situation, and the local authority is strapped for cash.
Only two nights a week of carer support, and nothing during the day, have left Fiona exhausted. As she said, ‘I’m OK to talk this morning, I had the carer in last night. If you’d got me tomorrow…’.
It was a sobering three-quarters of an hour that stayed with me over the next few days. Sobering personally, as I continued to grumble, if more guiltily, about my own battle with a non-sleeping toddler. Sobering politically, because it made clear what all the talk of austerity, of pain, and of tough choices in our political debate really means.
Fiona needs our welfare state in three ways; to keep Cara alive; to keep them both financially secure through Income Support, Carers Allowance and tax credits; and to provide the care support to keep her capable of being the mum she wants to be.
The NHS remains, at least theoretically, protected from cuts. As an electorate we continue to demand that Cara is provided with the medical treatment she needs, she will not be allowed to die on our watch for lack of state funds. The extent to which we are prepared to continue to provide the social care and level of benefits that she and Fiona need for a decent life is much less clear.
A situation appears to be looming in which the proportion of national income going on public spending will be permanently reduced. Is this inevitable? Must we accept being forced into making what Declan Gaffney terms ‘tragic choices’, where all the options we have mean going against our core values, where we end up choosing between funding benefits and social care properly?
The basis for our response has to be fiscal honesty, with ourselves and others.
I’m no fan of the austerity policies of the current government. Cuts have fallen heaviest on those with least, and Osbornomics have left the recovery slower and weaker than it should have been. I’m with those (like Frances Coppola, the IMF and Martin Wolf) who say we should currently be borrowing more to invest, keeping the recovery going and reducing the long term readjustment needed.
I’d bet my last pound that Ed Balls fully agrees with those commentators. But Labour can’t fully follow their proposed path, our economic credibility dashed by the recession on our watch, much of our political capital spent on the bank bailout. The flawed Tory interpretation of the crisis and the appropriate response prevails in the media and amongst the public (see this excellent critique from Simon Wren-Lewis). It’s not clear that we can change that ourselves any time soon.
More importantly, even if ‘media macro’ moved in an economically literate direction tomorrow, increased borrowing is no long term escape from all hard questions about public spending. Of course extra money for schools, hospitals, social care and benefits did not cause our economic strife. But we went into the recession with our tax take at an insufficient level to pay for our social democratic aspirations, and our ageing population continues to place ever higher demands on our public finances.
Lefty wonks like me need to honest about our limits too. Yes, we can get better and more efficient at delivering services, and do more to prevent some problems arising. But that often takes up-front investment, and efficiency gains are often either not cashable or not achievable. Delivering on service integration, personalisation and all those buzzwords should perhaps be seen as a route to improving the care Cara gets, not a realistic route for achieving substantial savings.
We need, therefore, to get honest about tax.
There is, of course, no taxation deus ex machina. Yes, we can tax more progressively, giving some very rich people as much of a soaking as we can in the teeth of media hostility in an open economy which is home to a large number of sophisticated accountants. Yes, we can employ our own sophisticated accountants and get better at collecting tax and closing loopholes. But neither will be enough to solve the challenges we face.
We need to level with the electorate that delivering the social democratic goods we want, and I believe that our society wants, will cost most of us more tax.
That is not an easy sell in a country full of overleveraged, oversqueezed households. At the UK level it will mean taking on a Tory party with heavy media backing itching to paint us as tax and spend(thrift) incompetents.
At a Scottish level it means taking on an SNP pursuing a right wing agenda on tax whilst spinning a left wing populist agenda on spending. It means taking on a party that has managed to convince a substantial proportion of our core voters that independence would have meant no austerity or tax rises, and whose rhetoric has spent the savings from Trident several times over.
I have four suggestions as to how we proceed.
Firstly, let’s never fall into the trap of Osborne’s macho posturing on austerity. It’s wrong in tone, and it warps our soul to do it. In the long term it means that the case for spending on public goods is lost.
Secondly, we need to keep making the arguments for the welfare state, and keep asking basic moral questions. We must continuously stress the ways that poverty damages people. We must remind voters that the welfare state is there to protect everyone from the worst that can happen to anyone. We need to ask whether the exhaustion of a mum, the denial of opportunity to a child, or the limiting of an older person’s care contact to fifteen minutes in every twenty four hours are prices worth paying for a council tax freeze which benefits the well off most of all.
Thirdly, we need to finish the debate on priorities, charges, targeting and universalism that we started. If funding to a public service is cut, it often simply transfers the cost to an individual. It might be fair to ask better off pensioners to pay more for their bus travel, or students with a long, well-paid career ahead of them to make a contribution to their higher education. Should we really force Fiona to have to scrabble together cash to buy extra care?
Finally, constantly talking tough choices leaves us more than a little short on the hope thing. We need to communicate a coherent strategy for rebuilt economic prosperity, something that we are not doing at the moment. If we are going to ask people for more money, we must balance that with genuine hope of an improvement in their own situation. Plus, if we can rebuild our tax base, the honesty required of us will be a little less challenging.
This is not an easy fight. Perhaps at a UK level it seems politically suicidal to do much more than hold our current line against unfunded income tax bribes. But we cannot avoid the fight in Scotland. At the very least we must take on the SNP on the Council Tax freeze.
If we cannot fight here, where the political culture has greater social democratic pretentions, we will fail Fiona, Cara, and all those across Scotland and the UK who need us, for years, maybe decades to come.
*All names and some details relating to ‘Fiona’ and ‘Cara’ have been changed to protect anonymity.