Interesting discussion between Don Paskini at LibCon, and John Rentoul (here, and responding to Don here).

John wrote that Labour’s decision to tax bankers bonuses was a further nail in the coffin of New Labour and their hard won reputation for economic competence, and that it would lose the goodwill of the types of voters in marginal seats that they need to win future elections, rendering them unelectable for a generation.

Dan replied pointing out correctly that the polls actually showed that higher taxes on the wealthy are popular, and the penalisation of city bankers especially so. John’s response was that they were popular in the short term, but would do much greater damage to Labour’s image in the long run.

I’ve some sympathy for John Rentoul’s view here. Polls on whether the public agree with a policy or not do not always tell the whole story. When looking at a policy there is the direct effect of whether people agree with it or not, and the indirect effect of what associating themselves with that policy will do to a party’s image.

The example I normally use is not taxing the wealthy, but immigration. Polls consistently show that immigration is an issue people care about, and that they want harsher restrictions upon it. Surely immigration would be a winning issue for the Conservatives? Not necessarily, since they have also spent the last four years trying to change their image to look less reactionary and “nasty”. If they made anti-immigration a key message, it might itself be popular, but would risk making them look bigoted and unpleasant.

It’s the same with taxing the rich. If tax hikes are necessary, polls always show that people much prefer them to hit the rich. Equally, penalising bankers is a route to easy popularity. The downside is that it risks making Labour look like a party that doesn’t like success or aspiration, an image that Tony Blair managed to shed.

It’s a balance though, and in this particular circumstance I don’t know if John is correct. It may be that the public’s desire to see the bankers cut down to size and appetite for taxes that apply to those richer than them outweigh the potential damage to Labour’s image – the reality is that in judging trade offs like this, polling can’t necessarily give you a firm answer.


108 Responses to “Is bashing the bankers risking the New Labour image?”

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  1. “historians will note how it is not the first time that a European government has chosen to blame the ‘money lenders’ for a countries woes. For a political party to attack any single group based simply on their occupation is as disgusting as attacking a group for the colour of their skin or their religion”

    @ Tony M

    I’m sorry but the section that I quoted from you above is ridiculous. You seem tot be trying to equate the bank bonus tax with the Nazis which is a very interesting leap of logic. A rubbish one that has no place on a polling discussion forum. Taxing and blaming bankers for a recession that was (partly but significantly) caused by them is not the same as racism. In any way.

    Stop trying to equate opponents of our banking system as crypto-Nazis using phrases like “Reichsfeinde”. Guido is much more that place for that sort of rubbish.

  2. I really have to agree with John.

    You just need to read the forums to see that it’s a very popular policy across the parties support.

    Daily Mail and Guardian readers a like are in general consensus on the subject in my opinion.

    Bankers need to make a gesture. And this is a great one.

    People just see it as a gesture. They realize that it’s not a long term strategy.

    This how voters think in my opinion, across the board:

    “I’m not getting a pay rise, and my services will be cut because of these banks. So they should suffer a bit as well”.

    It’s a nailed on winner.

  3. Can I ask why people are referring to long term conequences and long term policy?

    This is very likely just a one off gesture, for the purposes of an election.

    I really doubt whether it will continue past May 2010.

  4. “What is undeniably damaging for Labour, IMHO, is the rise in National Insurance contributions”

    I really don’t agree. The move may have a short term unpopularity, but I think that most voters realize that tax rises are as likely and neccesary as cuts.

    Labour’s polling hasn’t been affected at all by the tax rise. Which suggests that people accept the position they were in.

    You could even argue that the tories are possibly suffering from it more.

    As suddenly they are the party not making serious moves on the economy.

    The tories polling on economic competancy has crashed in the last 6 months.

    By more than 15-20% on average.

  5. “For a political party to attack any single group based simply on their occupation is as disgusting as attacking a group for the colour of their skin or their religion”

    When you are a major shareholder of these companies, you can attack your employees however you want.

    People turned on bankers, as they are now paying their wages and bonuses. Little other reason.

    Nobody would have a problem with bonuses, if the tax payer wasn’t basically funding them.

    Bankers can make and lose how much they want, as long as it’s there money.

    Which is the genuine law of the jungle

  6. “Hardpressedtqy ”

    To answer your queries, I think the governments goal was to stop big bonuses in a very testing financial year for the public.

    If the banks defer bonuses for 2 years, then I think they will feel that they have done their job.

    Labour want bonuses to be paid, in truth, when the voters are more confident in the economy and their own jobs.

    If the banks want to defer payment for 2 years (when they will have more capital themselves no doubts), then it will probably suit both government and banker

  7. Finally, I think you are actually overestimating the intelligence of most voters, and the morals of political parties.

    This is all about “Bankers will suffer like you for 12 months”.

    The general public won’t be questioning the concequences, or the morals, or the reasons behind the move.

    They will just be saying “Hell yeah. I haven’t had a pay rise. Why should they?”

    The policies obviously just a very short term (doubt it will even make it out of 2010 before it’s scrapped) idea. To boost moral in voters. To send out a message of:

    “The Labour party isn’t elitest, we are all the same”.

    I don’t agree with looking into it in that great a detail. For every voter that looks into the fine print, there will be a thousand who think the general concept is great.

    It was a very good idea. Not original I should add (happened a few times in less high profile circumstances in the past). But very topical.

    I think that’s the tories problems at the minute. They have a habit of “party first, voter second”. Cameron wouldn’t do it at risk of upsetting the party.

    Along with the marriage tax breaks (is it 1959 or 2009?) I think you could argue that Cameron is pandering far too much to the party, and ignoring the electorate.

    A lot of Labours recent policies have played on this.

  8. “The tories polling on economic competancy has crashed in the last 6 months.

    By more than 15-20% on average.”

    Populus and Yougov both showed the Conservatives’ economic ratings going up.

    And all polls showed the NI rise to be very unpopular.

  9. Mike

    You can’t be serious. You must be a Tory troll.

    If the banks reduce their bonuses they make more profits and are taxed on these profits.

  10. It is clear that some people believe that Labour are eating into the Tory vote. I still firmly believe that those who have decided to vote Tory have already made their minds up and will do so. (which is why Tories are still around 40% consistantly). The reason i can see that Labour are narrowing the vote is from Lib Dems and floating voters. I dont necessarily believe that tax on Bankers Bonus (“red meat for the heartlands”) is the be all and end all and will change the outcome of the election. I think that Labours vote is still very fragile and could easily go backwards if their is an further bad economic news between now and the election.

    It will be very interesting to see what happening as regards polling in the marginals.

  11. Graham

    That’ll be why I have the impression that each government since 1945 has been worse than the last.

    Eric Goodyear

    I remember doing tax returns when the top rate was 19/6 in the £.

  12. @Hatfield Girl – “And it is already a very high tax rate economy”. In many ways I would have to side with Eric in your debate. You’re wrong about tax rates on the under £20K earnings (these were at 24% in 97, reduced for a good while to 10%, but now 20%). You also forget about tax credits – we can argue whether these are taxes (‘positive’ ones) or benefits, but they effectively reduce tax rates for the low paid even further. They are enormously complex, which is a key criticism of virtually everything Brown did as a Chancellor, but they are quite effective.
    Overall, UK has a mid ranking tax regime in terms of tax as a % GDP. Not as low as the US, but below most European countries. Our public services and infrastructure reflect this – in the US roads are falling apart and millions have no healthcare, while in France they would not want our NHS, but no doubt would like our taxes. You pays your money and takes your choice. I don’t criticised Brown for overtaxing – in many ways we should have paid more tax in the boom years. My criticisms would be complexity, waste and value for money, and some technical points about distribution. For example, reducing capital gains tax to 18% instead of coordinating it with income tax rates means wealthy people can avoid substantial tax liabilities by declaring income as capital gain.
    On the broader debate, maybe your reaction sums up Anthiny’s comments at the start of this thread? Any hint of Labour tax rises frightens people, as there are still assumptions out there that Labour are the party of high taxes.

  13. Income Tax—-the last time that I paid 65% was twenty
    two years ago under Maggie’s government and this
    was the same government that doubled VAT seven years earlier. As for next election almost everyone must know that things will not get any easier after 2010
    but which party may soften the blow– that will be the question asked in the polling booths.
    As for most people mortgage repayments are now 130 pa down and retail sales are up almost everywhere!
    —Daily Telegraph Business 14/12/09

  14. @ David Greybeard

    Re: Mortgage Repayments

    That was in the governments plan and so they shouldnt get the credit for that. I would rather have a job and pay higher mortgage payments thanks very much!!

  15. I meant to say that was not in the governments plan……

  16. @Colin – “@ ALEC :-

    “I still maintain Cameron was wrong to make such a loud noise about cuts – it frightened the horses and has given Labour a chink of light. ”

    It depends what you mean by “wrong” Alec.”

    I understand what you are saying. I was speaking purely in the narrow terms of winning the next GE only. To be ‘correct’ in the fullest sense of the word would probably mean short term electoral suicide, which is why neither Labour or the Tories have come remotely close to telling us in detail where the full set of ‘tough choices’ will fall.

    @Mark R – “It is clear that some people believe that Labour are eating into the Tory vote. I still firmly believe that those who have decided to vote Tory have already made their minds up and will do so. (which is why Tories are still around 40% consistantly). ”
    It is interesting that for a while the Tory vote was sub 40% in a few polls, and now seems to have edged back up. The 37-39 scores generally occured with Labour just below 30, but now Labour and Tories are both a point or two up, with Labour at their highest point for a long time in two polls. If these were real trends, rather than MOE or sampling derived, it does suggest that there are still more soft Tory votes for labour and LibDems to try and peel away.

  17. thank you for all the responses to my last question, it was genuinely very helpful in understanding this whole thing.

    However, at the risk of trying everyone’s patience can I ask a further question or two???

    As I understand it from what has been said this “tax” is being paid by the banks rather than the individuals. We as taxpayers are now the owners of quite a number of the UK banks. So doesn’t that mean that we taxpayers are not only paying the bonuses but also paying the tax on the bonuses as well?? And aren’t we all going to cop it again when we have to foot the bill for increased NI contributions??? Unless I have got something seriously wrong might that not actually undermine the popularity of any charge or tax?????

  18. @ Alec

    I take on board what you are saying but I still cant see that people are moving across from Tories to Labour, otherwise wouldnt we see the Tory vote going down and Labours vote going up?. The only conclusion I can come up with is that people who are floating voters are leaning towards Labour rather than the Tories and also Lib Dem seem to be reducing when Labours vote is going up. I could be wrong but that only my perception of what seems to be going on.

  19. ” So doesn’t that mean that we taxpayers are not only paying the bonuses but also paying the tax on the bonuses as well??”

    Your logic is irrefutable Hardpressed.

    It’s a funny old world isn’t it?

  20. I was keeping an open mind on Angus Reid but they appear to have shown themselves to be Angus Reid have just shown themselves to be statistically dubious!

    http://www.visioncritical.com/wp-content/uploads/2009/12/2009.12.14_Scotland_BRI.pdf

    Compare their story – comparing British and Scottish attitudes to constitutional issues – with the data tables

    http://www.visioncritical.com/wp-content/uploads/2009/12/table_scotland.pdf

    GB unweighted base – 2004
    Scotland unweighted base – 174

    How many times has it been said that a sub-sample of that size not demographically weighted to the base population is meaningless?

  21. Not quite that simple Hardpressedtqy. The bonus pots come from bank profits, which are themselves taxable. The Exchequer wins because the tax take on the bank’s profits, that makes up the bonus pot will be higher than the tax that would have been taken in profit tax.

  22. Mark R —-could you really stand a 16% mortgage interest rate again and 10% unemployment at the same time? That’s what I call real pain

  23. @ David Greybeard

    Who siad anything about 16%. they were fine when they were 6%. At least if I had an an income I would have a better chance of paying higher rates.

    Sorry but the one thing that annoys me is when the government say they have given us lower interest rates when it was the economic downturn and not them that gave rise to it.

    Nothing personal. OK

  24. @c.l.a.d
    Thank you for that. It is an interesting way of looking at it and I do get your point. But I have this nagging thing at the back of my mind that even the banks that are still making losses are still giving bonuses.

  25. David Graybeard “could you really stand a 16% mortgage interest rate again ”

    They were hard times. Still in those days you could pick up a serviceable 2 bedroomed house for £20k, and I did, so the interest was £320 pm, quite affordable really.

    Same house is on the market now for £140k, so even a 5% mortgage (go out and try and get a better deal) is expensive. And the unemployment rate is 9.1% in my region.

    Swings and roundabouts really.

    Sorry for psephology-free post.

  26. C.L.A.D

    I think Hardpressed has a point.

    Anything the Treasury takes from a state owned bank reduces the net worth attributable to the taxpayer.

    I know that share price is not related to net worth-but whilst losses are being sustained, paying this tax to the Treasury is merely repatriating some tiny part of the state’s funding of those losses.

    The only way in which the Taxpayer could have gained was if the tax had been a charge on the bonus recipients-people who have escaped the furore & the tax & all the righteous indignation.

  27. @ Shoopkeeper Man

    Yes I agree with your comments. What makes my blood boil is when the government want to take the credit for low interest rates as if it were some sort of great master plan in the grand scheme of things.

    And as for the economy getting better, well without being a kill joy try telling that to the 1700 steel workers on Teeside. I think they might disagree on that one.

  28. Apolgies for the spelling by the way, I obviously meant @ Shopkeeper Man and not Shoopkeeper Man

  29. @Mark

    I’m only in my 40s and I have started using phrases like “what goes around comes around”. Booms, busts, high interest rates, low interest rates, high inflation, low inflation, high unemployment, full unemployment. I have experienced them all, and have suffered and benefitted from them all.

    Politicians claim all the credit for the good times and blame the bad times on someone else. I’d me more critical if I didn’t know that the public were so easy to fool.

    Now to the polls. Whilst bashing rich, undeserving bankers is electoral gold at the moment, these bankers are slippery fish and will defer, evade, avoid and take up residence in Her Majesty’s tax-free dominions around the globe.

    Does anyone think that there will be a dip in support for Labour when it emerges, as it will, that no bankers suffered or were harmed in the making of this law?

  30. @Shopkeeper Man – “Politicians claim all the credit for the good times and blame the bad times on someone else. I’d me more critical if I didn’t know that the public were so easy to fool.”

    Quite right. One of the features of this downturn is that it was built up on the back of interest rate levels (particularly in US and UK) that were too low because governments and central banks thought they had cracked inflation, rather than realise their economies were being stoked by ludicrously cheap Chinese imports holding down prices on the backs of a fix yuan/dollar exchange rate.
    Politicians rarely avoid global market influences, but some can ride the wave a little better. Brown does deserve credit for maintaining growth after the dotcom bubble and for keeping us out of the Euro (wouldn’t Ireland love to devalue now) but by and large you’re right.

  31. “these bankers are slippery fish and will defer, evade, avoid and take up residence in Her Majesty’s tax-free dominions around the globe.”

    Shopkeeker, I promise you they are not in the main slippery or malevolent. They are normal, hard working people carrying out their tasks according to widely accepted ethical grounds. The mistakes were not as a result of personal human error by people on bonus systems, but instead a result of a “crowd” mentality where no-one wanted to be left behind, or to be the one pulling the rug .

    Leadership went missing, if you like, but those leaders in error can be counted on the fingers of very few hands, and in the Global environment, it is perhaps understandable that keeping in line with received wisdom is more difficult than it used to be.

    The current reward mechanism might in future be regarded as out of date, but we seem to be stuck with basic+bonus+share options for now. All of which part-controlled by a complex HMRC system of rules, caps, limits etc.

    The employees actually have very little say (apart from by applying for work with rival multi-nationals) – it’s the people who advise on the myriad schemes who are having their brains fried trying to mitigate. No financial services employee I know would dream of requesting re-location on the back of this levy. It’s higher up than the people who actually receive the cut of the £4bn

    The culprits are rather removed by now, and there’s no appetite in this country to string them up. Thank goodness. I think the support for Labour as a result of this policy is softened by the fact that Osborne supports it (and might screw down further if given the chance)

    My only slightly partisan opinion is that the whole system of reward and taxation thereof should be simplified, and I personally believe Brown/Osborne cannot bring themselves to do that.

    e.g. the mechanism by which 40% pension relief is obtained through the PAYE system is simply impossible to unwind. You’d have to ask people to save post-tax, and that would destroy the whole concept of private pensions.

  32. I’m almost with you Alec except that I think high interest rates would have kept the pound very high. It’s been too high IMO for years, and manufacturing has suffered.

    I’d have favoured low interest rates plus credit controls. My girlfriend was offered a 125% mortage for £140k. She earned £12k at the time.

    Bubbles burst.

  33. I meant “Brown/Darling” cannot bring themselves to simplify tax ( but I believe Osborne would probably make apig’s ear of it anyway!)

  34. @ JohnTT

    I didnt say malevolent. I hold no grudges for anyone, anywhere.

    It is natural if one feels that one is overtaxed and punished to be a slippery fish and to avoid the taxmans keepnet.

    These rich bankers help pay for my childrens education (my meagre tax contributions wouldn’t cover it).

    Whilst battering these slippery fish may seem fun in the short term we run the danger that they will swim across the oceans and lay their golden eggs elsewhere. Meanwhile the regulators stay here, in deeper waters, avoiding the hooks of the baying public.

    I can’t think of any more bad fish analogies so I shall end my post. I just hope fins improve. ;)

  35. At the end of the day, a lot of the money that Labour spent on schools and hospitals was raised as a direct result of the overheated financial system. Labour does rather seem to be trying avoid their share of the pain, having spent all of the gain.

    The bankers could perhaps have been more prudent in the past, and loaned only at far more sensible LTV ratios and income levels. But had they done so, Brown and Darling would have had to forgo many billions of pounds of VAT, stamp duty and other levies and so would have less “Investment” (spending) to brag about.

    But I suppose “we rode the bubble and squeezed it for all its worth, and now we’re paying the price for it” isn’t a very good policital message.

  36. Err, that last post was actually me. Heaven knows how the word “Bryan” found its way into the name box. I guess my girlfriend was searching Facebook on the wrong tab or something..

  37. I think there should be no tax on bonuses. However, I think that RBS should have been nationalised and the bonuses should be distributed to the general public as the main shareholders.

  38. Anthony, Mike Smithson has just posted an intriguing analysis of the latest ICM poll, raising the question of some possible fixing in Labour’s favour. I’d be very interested on your thoughts on this.

  39. He certainly didn’t – he just highlighted that the raw sample was a particularly Labour one, and what the implications might be for MORI if there is a seasonal reason for it.

    The very Labour raw sample for ICM should not have caused any particular problems for the ICM poll, since they weight by past vote and corrected it. If it had been MORI, who do not politically weight their samples, it would have produced a poll that was very good for Labour (though not as good as some there are speculating, since even without specific political weighting, their demographic weighting would have addressed it to some extent).

    Basically, if it was just the sort of sample that random chance spits out (and the chances are it was), it doesn’t mean anything at all. If it is a sign that raw samples in the run up to the Xmas are systemically more Labour, then it could be a reason to expect MORI’s poll to be good for Labour too.

  40. Didn’t he? I understood this:

    “Was there something special, I wonder, about last weekend that caused a disproportionate number of 2005 Labour supporters to be home ready to answer ICM’s questions when the pollster called?”

    to be a suggestion of something untoward.

  41. Aspiration is fine.

    Abject greed is something else. And that’s what we are talking here.

  42. James,

    Nope (unless he’s suddenly started drinking lead based paint or something) – he’s suggesting that there’s something odd about people’s behaviour last week that produced a sample that was more Labour (such as most of them seeming to have spent their weekend queuing outside Bluewater where pollsters cant reach them)

  43. Perhaps there were a good many Tories who lied – saying they’d voted Labour last time, but never again etc in order to affect the swing figures and cheer Cameron up.

    On second thoughts, let’s not go there. most people aren’t cunning are they?

    There wasn’t a big bingo tournament on telly at the time was there? (cf the PBR not class-ism by me!)

  44. In was surprised to find that, within a sample of 1009, 70 people refused. Had I paid for a sample of 1000, I’d expect 1000 successful calls.

    Is this the norm?

  45. Shopkeeper Man – I’m amazed that as little as 7 percent refused. If that’s the level of non-response, then clearly there isn’t such a thing as non-response bias. But it implies that Britain is a nation of politics junkies and the level of turn out at the elections seems to indicate otherwise.

  46. You’re thinking about different things.

    When doing a phone poll, firstly there is non-contact bias (the phone numbers who the pollster rings, but no one picks up the phone. They will typically ring back several times over several days to try and contact them, otherwise this would be a bias against people who are out a lot).

    Then there is refusal bias, the ones where people pick up the phone, the pollster asks them to take part, and people say no thanks.

    Companies do not habitually make these numbers public, but out of all the phone numbers dialled, I think it’s something as low as 1 in 6 phone calls that actually result in an interview.

    The refusals here are something different – they are people who agree to answer the survey, but just refuse to answer that particular question (the sort of people who say “That’s between me and the ballot box”. Gah!)

  47. I see now.

    It’s very complicated isn’t it? I started using browsing your site Anthony with the view that opinion polling was basically the same as “Family Fortunes”; the more I delve the more fascinating it becomes.

    I think it is made better by the fact that I couldn’t give a toss who wins, so long as it’s close enough for me to enjoy election night in its full glory. It’s a shame that exit polling is so accurate these days as it slightly spoils the fun, but with the brand new incumbency-penalty we should get a few portillo moments.

    In the absence of any new polls, does anyone have a particular favourite Portillo moment? Goldsmith taunting Mellor was a good one.

  48. @Shopkeeper Man – I too am suprisingly ambivalent about the result, but I have been dreading a walk over election as possibly the most boring news event ever (apart from dead pop stars etc)

    “In the absence of any new polls, does anyone have a particular favourite Portillo moment? Goldsmith taunting Mellor was a good one”. My Portillo moment must be when Anthony King excitedly said of one shock result in a former Tory safe seat (can’t remember which seat it was) something along the lines of ‘this isn’t an earthquake, this is an asteriod striking the earth and wiping out all known life..’

  49. You mess with these people at your peril it seems!

    From a SKY News Blog today :-

    “The fallout from the Government’s new bonus tax continues to rain down on Whitehall.

    I have it on good authority that a number of major banks are poised to rebuff ministers’ requests for tens of millions of pounds in funding to support the launch of the National Investment Corporation (NIC).”

  50. To answer the question, I think it probably could a bit, but is balanced by people also wanting to punish the bankers.

    I think it’s an indulgence. The important point is to reform the flawed regulatory system where the separate FSA and the Monetary committee weren’t looking at the whole picture.

    It is vital Britain has a successful financial sector. Who else relies on it to create work in other sectors, or the tax it pays? You and me.

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