Tories go for redistribution?

A few Tory bloggers have got upset with Oliver Letwin's recent comments that the Conservatives should embrace the principle of redistributing wealth from the rich to the poor in order to prove 'compassionate conservatism' is more than empty phrase-making:

"Mr Letwin told The Daily Telegraph this month that the party should support the redistribution of wealth as part of its efforts to show that the Conservatives were adopting a more compassionate and caring image.

Redistribution has traditionally been seen as a socialist objective, even though Tony Blair has consistently refused to go that far and has not reversed the cuts in the top rate of income tax introduced by Margaret Thatcher."

It's not difficult to see why the free-marketeers got so alarmed and why the Tories wheeled-out Francis Maude to make assurances that the top rates of income tax will not be raised because Mr Blair, both in word and in deed, has shown he unequivocally does not believe in narrowing the gap between the rich and the poor.

However, even if Letwin's idea had been taken on board, while this would have obviously put the Tories to the left of New Labour, it would have been wrongly been described as 'socialist'. Modern socialism did not invent redistribution: the three monotheistic religions have all seen looking after the poor as a religious duty. In ancient Israel, for example, 'taxes' were taken in the form of 'tithes', which were then used to support the priestly class (i.e. the Levites) and were to be distributed to the needy. Everyone knows how to quote (out of context, of course) Jesus saying to Judas that, "the poor you will always have with you" (Luke - I think). Moses command that "there should be no poor amongst you" (Deuteronomy - I'm sure) is less well-known.

And in modern times, the Conservatives have also practiced redistribution. Disraeli described Britain in his novel Sybil as being comprised of two nations - one rich and one poor and believed, not least because of the extension of the franchise in the 19th Century, in the necessity of using redistribution in order to make the two 'one nation' (although he never actually used the phrase.).

Thatcher, in her disregard of this particular Tory tradition, was really much more like Gladstone. Which is not to say the Thatcher governments didn't practice redistribution themselves - except it tended to be towards the rich. The reductions in income tax and the subsequent shift to regressive forms of taxation such as VAT shifted the burden of taxation onto the poor. This is the system that New Labour has left more or less intact and results in the present situation where those families on low income are taxed at an overall average marginal rate of about 41%, whereas the wealthy, around 39%.

I once heard Samuel Brittan, monetarist and Milton Friedman groupie, sum up the traditional Tory approach by saying: "Redistribution, yes; equality, no". That Letwin's remarks, which fall into this very limited Tory redistribution tradition, could both put him to the left of Blair and attract condemnation for his 'socialist' ideas shows how deeply-entrenched neo-liberal economics have become amongst our political class. Since it's the new year, I'll offer an easy prediction: Cameron's new model Tories will be 'progressive' only with regards to women, gays and immigrants; when it comes to economics, it's going to be same-old, same old. Bit like New Labour, in other words.