Politicians who think the public support tax rises do so at their peril

For two decades, most senior politicians and their advisers have been united in their views on taxes. Tory or Labour, they considered the public to be intensely relaxed about tax rises because of their fear for public services.

The Labour Party is expected to significantly raise taxes in their first Budget in the name of protecting the NHS and reducing debt. They do not expect any backlash – and why would they? Everyone is reassuring them of an easy path through.

However, like their predecessors, this Labour Government is likely to pay a price in the polls – perhaps without ever realising it.

For quietly but surely – and contrary to conventional wisdom – tax-raising Governments post-1997 gradually lost the support of the great mass of working-class and lower middle-class voters that dominate the electorate.

Tony Blair’s Labour Governments started losing popularity in earnest in the early 2000s when their hefty tax rises – done in the name of public service “investment” – were felt by voters who could see no meaningful improvements in healthcare or education.

This was the mistake that ultimately saw the growth of the wildly successful TaxPayers’ Alliance (TPA), which celebrated its 20th anniversary two weeks ago. It rode a popular wave of resentment against Labour’s largesse.

Indeed, just before Labour were ejected from power in 2010, vast swathes of the provincial English electorate had peeled off to the Conservatives. While immigration dominated their justification in focus groups at the time, exasperation over higher taxes and stubbornly poor public services was a constant theme.

The Conservatives felt a similar force in office: by the 2019 election, focus groups of once-loyal Tory voters threw up endless comments how they would never again vote for a Party that raised taxes to such eye-watering levels.

Both Boris Johnson and Rishi Sunak had bigger challenges to their popularity than tax, but tax unquestionably played a part in their demise.

Over this long period, senior politicians and their advisers consistently misread the polls on tax. Any superficial glance at the research suggests voters believe public services to be failing, to be under-funded, and that tax revenue ringfenced for these services will directly improve them.

Entire political strategies for both main parties have been constructed off the back of such a simple analysis. But these strategies ultimately failed because politicians ignored four critical questions they should have asked.

Firstly: do voters think we are competent and can be trusted to wisely spend the money we take off them? Secondly, do people believe our values are voters’ values and that we would spend money on the right things? Thirdly, do they think we have a plan to deliver results? Fourthly, do they think we are telling the truth on ringfenced spending?

Blair and Brown’s Labour Governments initially scored well on these questions, carrying support for tax rises after the 2001 election for a couple of years. But opinion turned against them when the Government seemed to be wasting vast sums (which fuelled the TPA’s growth), when an apparent lack of improvement made them look clueless, and when people began to question whether their taxes really were going to public services specifically.

The Conservatives primarily lost support for tax rises because they completely lost public trust. They were seen to be an incompetent party for the rich. As Labour found, you cannot carry public support for tax rises when such fundamental doubts exist.

So what of Labour in 2024? It is early days, but voters are already questioning their competence, values and plans. And they are certainly aware that higher spending is going into public sector salaries. Labour ought to be nervous.

It was entirely reasonable of Labour to blame the Conservatives for their inheritance. However, politics is a rough old business and focus groups already reveal public irritation with early prisoner release and zero progress on small boats. This irritation risks bleeding into doubts about their broader competence; fairly or not, it is already being questioned.

More worryingly, stories on donated clothes to Sir Keir and Lady Starmer have really cut through. Even those who follow politics casually have clocked this story and are annoyed about it.

As Labour observed of the Conservatives within the last couple of years, it is hard to persuade people their taxes should go up when it looks like you are living the high life off their hard work. Throw in cuts to the winter fuel allowance and it is a toxic mix.

On planning, Labour have their opportunity to lay out their economic strategy on Budget Day. But they had a chance to do so before at the King’s Speech and little strategy was visible. The public did not notice a lack of real substance then, but soon will.

And voters have certainly clocked that Labour has spent vast sums on public sector salaries, as opposed to, say, equipment. While most people currently accept Labour’s point that salaries are a “front line” issue, this will not hold if public sector workers demand even more when tax rises start eating into everyone’s pay packets.

Politicians of all parties have become entirely blasé about taking money off people and have come to believe their falling ratings are always down to every issue except tax. But Labour might learn tax rises always catch up with politicians in the end.

James Frayne is a Founding Partner of opinion research agency, Public First