SE Academic Review 2023

35 ACADEMIC REVIEW 2023

“ New Labour’s commitment to low taxes was formalised in 1996 with the famous unveiling of The Five Pledges... ” New Labour’s economic policy was a very significant factor in bringing about their electoral landslide. The Conservatives had won the previous four general elections with a clear neoliberal rejection of the post-war consensus. Whilst the implementation of this policy was unpopular with many it did lead to the rise of a middle class and over the two decades in which it was enforced it increasingly became seen by the British people as the only reasonable and successful economic policy that could be implemented in Britain. Labour’s acceptance of much of Thatcher’s economic policy played a significant role in delivering the electoral landslide as it allowed much of the southern middle class who gained from Thatcherism to vote for Labour. Although, Labour’s shift to the right economically did isolate many on the party’s left they did not leave the party due to a combination of reasons: loyalty to the party, a lack of a credible alternative and the hope that they would be able to exert their influence within party politics, thus Labour was not hindered by their economic plan and only increased their potential voter base. Furthermore, Labour appeared to be more economically competent than the Conservatives. As previously argued, the Conservative Party could not succeed in an election if they could not project themselves as the only party who could manage the economy. With the economic argument either neutralised or won, Labour gained the opportunity to argue for more popular social policy and bring up questions of trust, both debates a modernised Labour could now win.

Pledge on taxes One of the most important factors that led to New Labour’s victory was countering Conservative attacks and public fears of Labour’s economic policy. In the public imagination Labour was known as a ‘tax and spend’ party, this association would prove disastrous in 1992 when the Conservatives released the ‘tax bombshell’ poster campaign on 6th January and claimed that under Labour spending plans the average voter would face a tax increase of £1,000 a year. These posters were followed by the successful ‘double whammy’ poster campaign that claimed that under a Labour government, voters would see “1. More taxes” and “2. Higher prices” (BBC News, 1997). These posters highlight one of the Conservatives’ main attacks on Labour before Blair and one of the major reasons why Labour was unelectable: people did not want taxes to rise and believed that a Labour government would raise them. The new Shadow Chancellor, Gordon Brown, became determined to improve Labour’s economic image (Brown, 2017, p. 122). He achieved this through one of the most prudent Labour manifestos. To combat potential Conservative attacks on Labour as likely to bring the country into debt, on 18th May 1995 he ruled out any increase in government borrowing and he promised to control inflation through a more independent Bank of England. To avoid another ‘tax bombshell’-like Conservative attack, Labour made few spending pledges. The shadow cabinet attempted to get little press coverage on any spending pledges they did make and claimed any increases in spending would be funded by money shifted from elsewhere, not through an increase in taxes (Brown, p. 123). Blair ruled out any increases in income taxes, despite Brown wanting to raise the top rate (Brown, p. 140). New Labour’s commitment to low taxes was formalised in 1996 with the famous unveiling of The Five Pledges with the fifth pledge committing Labour to ’no rise in income tax rates, cut VAT on heating to 5 per cent and inflation and interest rates as low as possible’ (Labour Party, 1997). The only tax rise Labour would announce would be popular: a one-off windfall tax on privatised utilities to fund a programme to increase youth employment. Labour’s commitment to no new taxes was very significant in acheiving their landslide as it removed the largest area of attack the Conservatives could make against Labour and gave a further signal that Labour could now be trusted.