Chancellor Rachel Reeves (Image: Kirsty O’Connor / Treasury)
There are few things more inevitable yet more humiliating in British politics than the U-turn.
For Labour, it looks to be a feature, rather than a bug. In recent days, we’ve already seen three.
Last week, Bridget Phillipson, Labour’s Education Secretary and class warrior-in-chief, announced that she would introduce a watered-down version of the ’ Higher Education (Freedom of Speech) Bill after making a big point about it being shelved.
And just yesterday, after much righteous anger from teachers, it was revealed that she will amend her education Bill after it was pointed out that, currently, it would curb the freedom enjoyed by academies.
But the major story this week has been Chancellor Rachel Reeves’ change of heart on the wealthy.
After her high-tax, high-spend Budget in October, Reeves is now having to row back on one of her more controversial fiscal measures – the plan to abolish non-dom tax status.
At Davos – of course – Reeves told an audience that: “We’re always interested in hearing ideas for making our tax regime more attractive to talented entrepreneurs and business leaders from around the world to help create jobs and wealth in the UK.”
As such, she’s now prepared an amendment to her Finance Bill that will make it easier for non-doms to bring money into the UK.
What prompted this, you ask? The immediate pressure comes from the fact that Labour’s punitive economic measures are scaring the rich away from the UK.
Recent analysis shows that 10,800 millionaires fled the UK in 2024, a 157% increase on 2023. According to the Adam Smith Institute, this was the equivalent of losing around half a million average taxpayers.
While Britons aren’t traditionally the most hospitable to the super-rich, having a few of them around brings considerable benefits.
The majority of non-doms are not just sitting around scoffing caviar and avoiding tax – they make up over a fifth of top-earning bankers in the UK.
A great many of them are the sorts of innovators and founders our economy desperately needs right now, and their international mobility – as Labour are discovering – means that they can very easily take their business elsewhere.
Anyway, her U-turn alone isn’t nearly enough to keep them in Britain.
The deeper point, however, is this: what Labour are reckoning with is that their ideology, and the moral crusades that come with it, are antithetical to what they promised to deliver – economic growth.
Despite paying lip service to the importance of supply-side reform, business and private investment in getting our economy growing, the Government repeatedly implements policies that undermine all three, and more.
Labour want to build more houses; they put the housing targets in the wrong areas. Labour want British businesses to thrive; they throttle them with unaffordable red tape.
Labour want to boost private investment in the economy; they scare off the rich with vindictive tax policies. Labour are finished with the culture wars; they refuse to enshrine free speech in universities. You get the picture.
If this Government really wants to make Britain more prosperous, it will take more than piecemeal U-turns. It needs to discard its entire, growth-crippling worldview. Don’t hold your breath.