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Last Updated: Friday, 20 June, 2003, 10:17 GMT 11:17 UK
Has Hain got a cunning plan?

By Nick Assinder
BBC News Online political correspondent

It reads like a script from an episode of "I Love 1992!"

Headlines screaming "tax the rich", and Labour leaders squirming over precisely what income level qualifies someone as well off - 60,000 a year? 50,000? Less?

And then only hours later the embarrassed culprit attempting to dig himself back out of the tax hole.

The Tories, meanwhile, are having a grand old time warning of Labour's disastrous tax and spend policies which would drive talent and enterprise out of the UK while hammering the middle classes into penury.

Peter Hain
Peter Hain is the first minister to call for such a tax shake-up
But the nation has not been pitched into some Star Trek-like bending of the time-space continuum.

This is still 2003.

It is simply that all the old arguments that snatched defeat from the jaws of election victory for Neil Kinnock in 1992 have resurfaced as a result of remarks by Commons Leader Peter Hain.

For him to claim that he is simply thinking long-term and wants an adult debate is missing the point.

After the 1992 disaster, which saw then shadow chancellor John Smith proposing a similar tax hike through national insurance, New Labour made a solemn pledge never to mention the words "tax rises" ever again unless preceded by the phrase "there will be no".

Cunning plan?

As Gordon Brown has amply demonstrated, this did not mean a Labour government would not actually increase taxes, simply that they wouldn't talk about it before hand.

A debate is precisely what the party did not want because it handed its enemies a golden opportunity to rip its half-baked policies to shreds long before they were fully-baked while, at the same time, scaring the Y-fronts off middle England.

Chances of having an adult debate were about as likely as finding a nuclear bomb in Iraq any day now.

This may all sound perfectly reasonable, even equitable, but is it good politics?

So, has Peter Hain completely lost his marbles or was there a cunning plan behind all this?


The big trick for Labour between now and the next general election is to shore up its traditional, Old Labour vote, while still hanging on to the middle class waverers who drove it to power in 1997.

For too many years, the government has been accused of taking its core vote for granted and ignoring its demands and aspirations.

Suggestions that the tax system should be reformed to take the likes of policemen and teachers out of the top, 40% tax band should appeal to the less well off while not scaring the better paid.

Trade off

And in any case, the past tax rises appear to have shown that there has been a change of heart in middle England.

Those high earners who regularly tell pollsters they would be happy to pay more taxes for improved services may actually mean it this time.

Inland Revenue office
The taxman takes up more of our time
The problem is, does the government really want to test this theory to destruction - its own destruction if its not careful? The downside is precisely the same as it was in 1992.

There has to be a trade off. Someone has to pay more and, according to Mr Hain, that should be those on the very highest incomes. So here we go again - what constitutes high?

This may all sound perfectly reasonable, even equitable, but it is good politics?

It may well be that Mr Hain and the prime minister believe that this time, given an altruistic following wind from the middle classes, they can win the argument.

Brown-Blair prism

And, by the way, many will believe it is unthinkable Tony Blair did not know precisely what Mr Hain was going to say even if he wasn't the driving force himself.

And if it was a case of Mr Hain going out on a limb, he is skating on very thin ice, particularly for someone spoken of as a future leadership candidate.

It certainly seems that a furious Tony Blair ordered him to cut the controversial part of his speech and tone down his remarks. But the damage had already been done by sparking the debate and reviving all the old 1980s spectres.

But there is another problem. Whatever the truth of who knew what when, this looks like another calculated attempt to get up Gordon Brown's cautious and prudent nostrils.

The Treasury has been taken completely by surprise on this one and is livid.

So once again, this row will be seen through the prism of the relationship between the prime minister and the chancellor.

The fact that it comes only a day after Mr Brown abandoned his new-found enthusiasm for the euro and reverted to his traditional language will only intensify speculation that the Downing Street Revengers Tragedy is reaching boiling point.

No matter which way up you hold this one, it still has the word "Doh!" written all over it.

Commons Leader Peter Hain
"In principle, those on very high incomes would be willing to contribute more"

The BBC's Jane-Frances Kelly
"It will hit the rich, but mean greater spending power for those on low and middle incomes"

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