Cynical tax gestures herald the comeback of old Labour

The idea that a 2.5 per cent reduction will push people into spending more is ludicrous. Honestly, would you cross the street for a shop that said in its window "2.5 per cent off"? And that's before the retailers, restaurants and all the other myriad businesses have to change their receipts, menus and invoices.

Likewise, the 45p in the pound to be brought in during the next Parliament on the top earners. The increased levy will affect 400,000 people and raise £2 billion — a sum that barely registers against the Government's borrowing of £120 billion. Of course it enables him to say he's a tax-cutting, defender of low and middle income families, chancellor. As they sit behind him, Labour MPs cheer him to the rafters and wave at the party opposite. That's the point — this is cynical, gesture politics. And it's pathetic.

It's his boss, Gordon Brown, putting down a marker. For a decade under Tony Blair, Labour refused to clobber the big earners. It was anxious to be seen to have abandoned its traditional dogmas and to be genuinely inclusive, a friend to the rich as well as the poor. Brown, as chancellor, signed up to that policy too.

There was though, always the belief with Blair's glowering Downing Street neighbour that he was uncomfortable, that he still clung to the out-of-vogue ways. His pals on the Left wanted Labour to embrace a progressive tax system. The suspicion was that Brown, in private, sided with them but the starry-eyed fawner over celebrities and billionaire businessmen at Number Ten wouldn't listen.

The recession and the cost of implementing today's PBR package have given Brown the justification he needs. There's an element, too, of being seen to exact revenge on the City, of punishing the high-rollers in the banks who have exacerbated the country's plight with their greed and recklesness. Of course, the City will not account for all the 400,000 caught by the 45p rate but an awful lot of people will be affected — and Brown and his willing helper know that.
There's a feeling here of a Prime Minister and Chancellor actually enjoying themselves. They're having a good economic war and today, with the return of old Labour, it's just got a whole lot better.