This article is an on-site version of our Inside Politics newsletter. Subscribers can sign up here to get the newsletter delivered every weekday. If you’re not a subscriber, you can still receive the newsletter free for 30 days
Good morning. Will Rachel Reeves change course on non-doms? And will the government be forced to do so over benefits cuts? The two questions are intrinsically linked, for reasons I explain in today’s note.
Inside Politics is edited by Georgina Quach. Follow Stephen on Bluesky and X, and Georgina on Bluesky. Read the previous edition of the newsletter here. Please send gossip, thoughts and feedback to insidepolitics@ft.com
Tax and spend story frays
The original sin of Labour’s policy to scrap the non-dom regime is that it, first and foremost, did not start life as a sincere tax policy but as an attack line. It punched Rishi Sunak’s political bruise over his own green card and his wife’s tax affairs, and it offered Labour frontbenchers something to say that gave their plans on tax and spend an air of plausibility (at least, an air of plausibility provided the interview in question didn’t go on too long).
Then, when Jeremy Hunt appropriated the policy, Rachel Reeves made Labour’s own policy more radical because they needed to be able to say they were getting the money from somewhere.
But in practice, now that Labour is actually in office and the important question about its plans on tax are not “how does this play tactically”, “does this put Rishi Sunak in a jam?” or “does it get us out of a jam?” but “does this thing actually raise any money?” the policy has come under question, both inside and outside the government. Harriet Agnew and George Parker reported on the City lobbying against changes to non-dom inheritance tax and reveal that Reeves may U-turn on them.
What’s the connection with the government’s cuts to benefits? (I refuse to use the phrase “welfare reform” — for something to qualify as a reform, it has to have some kind of policy or philosophical logic, or to be underpinned by a genuine and meaningful change to how a system operates.)
The government is currently minded to try and grit out the looming rebellion over these cuts, but taken together, the double whammy of “changing rules for non-doms” and “cutting the amount the government spends on disability benefits” provokes a lot of political anxiety across the administration. A sub-optimal tax policy may yet be an additional cost of benefits cuts.
This tension is baked into everything the government does — because its spending plans involve very little cash for social policy, it has consistently reached for ways to get businesses to do more of those responsibilities for them, whether through its labour market reforms or its higher minimum wage. The danger is that it is a terrible way to do social policy and a terrible way to get growth.
Now try this
This week, I mostly listened to Simon Rattle’s Beethoven symphonic cycle while writing my column. (Number 2 to be precise.)
