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Is history about to repeat itself, 50 years after the last time a Labour chancellor raised the basic rate of income tax?
Now that Rachel Reeves appears to have dumped Labour’s election pledge not to increase national insurance, income tax or VAT, she’s tipped to raise income tax by 2p on 26 November.
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Back in 1975, Labour’s chancellor, the old bruiser Denis Healey, did just that, though back then the basic rate of income tax was 33%, and he increased it to 35%.
Plenty of parallels…
It’s claimed there are similarities between the state of UK politics and the economy in 1975 and today. Labour had won a general election the year before, for instance.
Healey claimed he had inherited an economy in a mess from Edward Heath’s Conservative government. Sound familiar?
His spending cuts were seen as a U-turn and triggered an angry backlash from left-wing Labour MPs. Sound familiar?
In 1975, the Conservatives had a new leader – a woman, for the first time – in Margaret Thatcher, who even her supporters admit, struggled in her first year. Sound familiar?
In the 70s, Healey announced he was reviewing the options for a wealth tax, just as Reeves has been urged to, by former Labour leader Neil Kinnock and union leaders.
And just as the Tories claim higher taxes will trigger a brain drain in 2025, Mick Jagger and the Rolling Stones had left for France in 1971 and David Bowie moved to Switzerland in 1976.
A phrase often attributed to Healey was that he wanted to “squeeze the rich until the pips squeak”. In fact, what he said, in 1974, was that he “wanted to squeeze property speculators until the pips squeak”.
Margaret Thatcher in 1987. Pic: AP
…but it could be worse!
But before we get too depressed about 26 November, the economy was in a…
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