Brown to scrap tax rises in bid to calm voter fury
Gaby Hinsliff and Jo Revill
Sunday May 4 2008
[This picture is a genuine Labour party poster from the 2005 Hodge Hill by-election)
Unelected chairperson of the Labour Party, Hazel Blears, has got into hot water recently by stereotyping immigrants and suggesting the public associated them with anti-social behaviour. This came only days after the new Prime Minister, Gordon Brown said he wanted to see ‘British workers for the British jobs’. See Socialist Unity Blog at: http://www.socialistunity.com/?p=528.]
Gordon Brown is poised to scrap a series of unpopular tax rises as part of sweeping changes to stave off a dangerous revolt over the rising cost of living which last week dealt Labour its worst electoral hammering in 40 years.
Today the Prime Minister will respond to a growing suburban uprising by signalling moves to help motorists and other consumers. His intervention comes amid a fresh assault over the 10p tax rate change, which backbenchers warn could destroy his premiership.
Frank Field, the renegade ex-minister who forced Brown into offering compensation for the abolition of the 10p rate, said dismal local election results had shown poor families did not trust the Prime Minister to deliver on what Field described as an 'Alice in Wonderland' scheme to give them their money back.
He spoke as Tory strategists vowed last night to make the 10p rate and the rising cost of living the heart of their campaign in the forthcoming by-election in Crewe and Nantwich, claiming tax was a 'huge issue' among working-class Labour voters in the seat left vacant by Gwyneth Dunwoody's death. It was announced late last night that her daughter, Tamsin Dunwoody, had been chosen as the Labour candidate for the contest on 22 May.
The question of the Prime Minister's leadership was also raised openly for the first time since the vote; Labour backbencher Graham Stringer said ministers were privately discussing whether there should be a challenge to Brown.
The Manchester Blackley MP told Sky News: 'I think Gordon is going to be the leader of the Labour party. There is no real tradition of regicide. But it would not be true to say that these conversations aren't going on between ministers and Labour backbenchers about whether there should be a challenge. There is a public display of loyalty and there is private despair.'
Last night Downing Street sources hinted the 2 per cent rise in fuel duty due in the autumn may not go ahead, in a concession to tight household budgets. Asked if it would be scrapped, a senior source said: 'We could do that, although it would not have any effect until October. We will reserve judgement until later this year.'
Brown is also expected today to highlight the role of the Competition Commission investigation into supermarkets in protecting families from high prices, promising that ministers will ensure stores do not keep prices artificially high.
Ministers also want Brown to rethink green taxes - including motoring charges and proposed 'pay as you throw' schemes for household rubbish - and to sideline his passion for Africa and the climate to focus on domestic worries.
Internal polling in London found Ken Livingstone's green policies, such as new charges for gas-guzzling cars, alienated older voters, while the environment was at best a low priority for others, suggesting that, as families' budgets shrink, so does their willingness to pay to save the planet.
'My colleagues will say Labour has got to be brave on green issues, but the public are really feeling the pinch,' said one senior minister. Downing Street sources hinted last night that trials of household-rubbish taxes may never be widespread, adding that Brown was 'fairly sceptical' about the idea.
The moves will be welcomed by MPs clamouring for practical measures to relieve pressure on family budgets. But Brown will face a fresh attack from Field when the ex-welfare minister tables a Commons motion this week criticising the response to the 10p tax crisis and demanding detailed, specific compensation measures be published before the next vote on the bill in mid-June. He has warned that the issue must be clarified or Labour could lose Crewe.
A by-election defeat could precipitate a crisis. Brown faces a 'triple whammy' with the poll in May, followed by the vote on the finance bill in June and a vote on detaining terror suspects for up to 42 days. Defeat in all three could trigger a vote of no confidence, ending his leadership without the need for a contest.
Describing the issue as 'potentially immensely dangerous' for Brown, Field said: 'What I thought [Brown] was going to say was "we are going to use every muscle in our bodies to find ways of compensating you". Instead of that, we had a garbled statement in the Commons which nobody could understand. I just think the 10p issue is going to be a live rail.' Writing in The Observer today, he warns the issue must be clarified before the by-election, adding: 'Failure to act clearly and decisively will, I fear, lead to further electoral disasters.'
Friends said Field was furious that the compensation package did not match what he had been privately led to expect. However, sources close to Brown said ministers would publish specific proposals early if they could.
Also writing in The Observer, former Downing Street strategist Matthew Taylor admits Labour is in a 'deep hole' and calls on Brown to focus on a few specific promises while delegating issues like prisoners' pay or plastic bag bans to his cabinet. He admits: 'It might not work. Then again, maybe nothing will.' Despite this, an Observer survey of MPs with marginal seats in London found no appetite for a change of leader after Boris Johnson's surprise win in the mayoral election. Gareth Thomas, the International Development Minister, who is defending a 2,028 majority in Harrow West, said: 'Gordon's the man for the job. We can carry on under him and win the next election, but we have been given some tough messages [by voters].'
However, the former Labour leadership challenger Jon Cruddas, MP for Dagenham, said Labour had not yet 'calibrated the language' to show it understood people's vulnerability. 'We talk about challenges when people are really struggling. It looks as if we are not emotionally in tune with them,' he said. 'We are losing our traditional supporters.'
Wounding losses in May and June could provoke a no-confidence vote in short order. 'The end for Mrs Thatcher came very quickly: she never thought it was going to be over the issue that blew up,' said one veteran backbencher.
Ministers will spend the weekend discussing the implications of Johnson's victory. Hazel Blears, the Local Government Secretary, rang Johnson on Friday and promised a constructive working relationship, but the government is considering whether to impose greater scrutiny on a Johnson administration over critical issues such as the Crossrail project or the Olympics budget.