It's the economy, Darling

This is my editorial from the new year edition of the Fabian Review on the theme of fairness in a recession.

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Shrill cries that the government had “abandoned the centre-ground” with plans for a new 45p top rate of tax on earnings over £150,000 showed just how detached the media classes can be from the country about which they pontificate.

Indeed, only 17% of the public occupy the mythical ‘centre’ which opposes the measure while 72% support the new top rate. With clear majorities in favour in all regions, classes and income groups – and among on Conservative voters too – it is difficult to identify many other policies with a broader ‘one nation’ public resonance.

Rumours of the death of New Labour are exaggerated. But New Labour was Labour too: the party of the windfall tax, anger at ‘fat cats’ and a penny on national insurance to find billions for the NHS. To talk tax at all was taboo for some but Fabian gradualism kept open arguments about equality, redistribution and progressive taxation, helping to shape the fairness argument which could define Labour’s public argument by what it is for, and not just by what it is not.

Political parties will naturally compete to occupy the centre-ground: the point is to shift it too. Like a flash of lightning on a dark night, the politics of the pre-budget report illuminated central choices in British politics. After a decade in which political cross-dressing has been in fashion, we had the novel sight of the main parties stealing back their own clothes, with clear differences over spending, whether to borrow in a recession, and what government should do to protect citizens.

Yet this greater willingness to articulate the big political arguments still faces a competing instinct, on both frontbenches, to blur the differences. How often did you hear any Cabinet minister making a principled fairness argument for the new top rate, or any shadow minister willing to express an opinion about it at all? (Tellingly, the Opposition have quietly briefed that they have no plans to reverse the move: another example – from the minimum wage to civil partnerships – of how Labour at its boldest does most to entrench change).

Gordon Brown is making the political weather after a turbulent year. 2009 will be a year of enormous challenges: the economic crisis will dominate while it is also the make or break moment for a global post-Kyoto deal on climate change.

Progressives, emboldened by the new Obama administration, can win the battle of ideas. But this will depend, above all, on more confidence in articulating the necessary case for government action.

‘The state’ is unpopular as an abstract idea. But, when it comes to the action which governments can take – such as protecting home-owners from repossession – the concrete calls are almost always for government to do more. That is why neither Margaret Thatcher or Ronald Reagan were ultimately able to significantly shrink the state. It is much less popular than it sounds.

Do not expect the right to concede the language of fairness. What must be tested is what – if anything – they want to do about it. This is a central argument to be won in the year ahead: that fairness doesn’t happen by chance.

* The Fabian Review is published on January 7th, and previews the Fabian New Year Conference 'Fairness Doesn't Happen by Chance' on January 17th. Fabian members will receive the Fabian Review in the post. Non-members can get a copy by joining here or can order a copy through the Fabian office