The Political Gospel of the U-Turn
Since Margaret Thatcher’s famous “You turn if you want to, this lady’s not for turning” speech in 1980, it has become political gospel that the U-turn is the worst of all political sins.
Yes, policies get quietly dropped, and yes, individual politicians may morph their beliefs to suit the wind, but I can’t think of a single politician in Government who has come out and said, “hang on, I think we were wrong here, we’re going to take another look and think again”.
This political gospel has taken even greater hold since the polarisation of Brexit. Parties and politicians make claims and promises that we all know bare little relationship to facts. Yet, governments have increasingly ploughed ahead along a blinkered path despite a sense that they themselves don’t believe in what they are doing.
Why?
We know that trust and faith in politics and politicians has eroded to possibly an all-time low. Is this unwillingness to ever stop and reverse course to blame? At a human level, trust is based on openness, understanding, consistency and good judgement. The people we trust most are those who we know to have good judgement and who apply that judgement with consistency and fairness. The people we trust the most are those we trust to change our minds.
It is, therefore, almost impossible to trust anyone who is also not open to changing their mind.
One of the keys to leadership is being the person who will say “stop” when something is not working, especially when everyone else knows it is not working. It is also hubris to believe that every time we do something, we are going to get it right the first time.
I could pick on many individual examples from all our recent governments of this hubris, but the changes to Agricultural Property Relief (APR) is topical. This is not to say it is better or worse than the many other examples of all political persuasions.
Problems with the Change to Agricultural Property Relief
There are four problems I have with the change to APR.
Firstly, the change doesn’t achieve what the Government says it wants to achieve. If they really wanted to close the APR loophole for people using it just to avoid inheritance tax (IHT), they could have done so. The wealthy still get a reduced IHT rate, so I doubt it will dissuade them. The government has advertised to any couple with “£3m” to come and buy a small farm in places like Wales to avoid IHT – the changes to IHT on pensions may even further encourage it. If part of the aim was to reduce agricultural land prices and encourage new farmers onto the land or smaller farms to expand, it could do the opposite.
Secondly, the policy was decided without any apparent understanding of rural and agricultural economics. I hear the argument that farmers shouldn’t get special treatment, but that doesn’t stand up to scrutiny. We do treat farms differently from other businesses. Farming is the only private industry where every business is dependent on government subsidy. This wasn’t the farmer’s decision but a government one. IHT relief for genuine farmers is an important part of the wider economic model for farms in the UK. Changing one part of that model, with no consideration for the others, lacks understanding.
Thirdly is the cognitive dissonance of Government ministers arguing on the one hand that this change was necessary for the public finances while at the same time telling farmers not to worry, they can find a way not to pay it. As soon as you get this cognitive dissonance from politicians, you know they know they made a mistake.
Finally, the resulting policy is one where the amount of tax you pay is completely arbitrary – based on how old you are, how long you will live, whether you’re married, how long your beneficiaries survive, and not based on actual wealth generation. Arbitrary taxes are never a good thing.
All of these issues started getting raised the minute the budget speech ended. Yet, the government immediately doubled down saying that it wouldn’t revisit anything and backed itself into a corner that became increasingly difficult to defend in the public imagination. Budget speeches give significant room for manoeuvre as there is always time to finesse the details before the final legislation is published. It is a mystery why the government didn’t run straight for the cover of always being able to tweak the final rules – they may still do this.
The Value of Open-Minded Politicians
Wouldn’t we trust politicians more if they took on board robust challenges and changed their minds openly and honestly?
Huw Irranca-Davies, the Deputy First Minister of Wales, has just confirmed a number of changes to the Welsh Government’s controversial sustainable farming scheme, including dropping the 10% tree cover rule. So it can happen. It’s no surprise that Huw has a significant amount of respect from the Farming Unions and has worked closely with them. This gives us hope.
Conclusion
We’re unlikely to see any other climb-downs, though. The employer National Insurance (NI) increase was not chosen because it was the best and fairest way to increase taxes; it was chosen because it maintained the promises not to increase Income Tax and VAT (plausibly or not). The fear is that the Employer’s NI increase will have a worse effect on investment, growth and jobs than if the government had just broken its promise and increased Income Tax. This, in turn, will make it even harder for the Government to avoid further tax rises if growth doesn’t meet targets.
If we want more money for public services, then Income Tax and VAT are the best way to raise the funds. VAT and Income Tax are involuntary taxes, so while they impact the economy, small changes don’t typically significantly impact economic behaviour – people will still go to work and buy things. Successive governments have sought to play around with voluntary taxes instead, the problem being that these change economic behaviours and don’t always raise the money expected. I share a real fear that a combination of the Employer’s NI rise and the National Minimum Wage rise will have a significant impact on entry-level recruitment. We saw the same thing happen after 2008, leading to long-term economic impacts.
New Governments can get away with getting the politics right but the policy wrong, or the politics wrong but the policies right, but not both. This is about more than just a hostile press jumping on every opportunity to twist the story against the Government; it’s about voter trust and perceptions.
We could do with some more politicians who are willing to come out and change their minds, and we should start applauding the occasional U-turn.
There is one other golden rule of politics that the Government forgot to abide by – don’t needlessly upset farmers.
