Philip Krinks: Working People
You may work, but are you a working person? This might just sound like an annoying exam question: probably one from the exams once sat by CEME’s philosophers and theologians, rather than by our economists. In fact it now appears to be crucial. It could determine your, and Britain’s, prosperity.
Enter ‘Working People’
Back in 2024 page 21 of the Labour Party election Manifesto pledged not to ‘increase taxes on working people, which is why we will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT.’ In other words, while there would be tax rises after the election, there was a pledge to protect a defined group of ‘working people’. This made good sense as an electoral strategy, even if depended partly on vagueness. A lot of people assumed, perhaps naively, that the protected group included them. Because they worked, they were a working person.
Problems with Definition
A year ago, as the new government’s first Budget neared, the Prime Minister was pressed to clarify the definition. In an interview on 23rd October 2024 with the BBC’s Chris Mason he was asked whether ‘those who work, but get additional income from assets such as shares or property, would count as working people’, Keir Starmer said, no, they did not count. What he meant was a person who ‘goes out and earns their living, usually paid in a sort of monthly cheque’ and who can’t ‘write a cheque to get out of difficulties’.
The problem was that this definition now excluded anyone with a small amount of savings. A Number 10 spokesperson rushed to clarify. People with a ‘small amount of savings’ were included in the protection. This was not quantified, but included ‘cash savings, or stocks and shares in a tax-free Individual Savings Accounts (ISA)’. (Depending on the punctuation, that example may prove to have been a hostage to fortune, given rumoured changes to Cash ISAs.)
The next day on the Today programme the very capable Exchequer Secretary (now Chief Secretary) to the Treasury, James Murray, was asked five times whether landlords were also protected. Do they work? With grace and admirable resilience he declined to answer. He may have understandably felt there ought to be easier questions on the exam paper. Entrepreneur and broadcaster Steph McGovern pointed out wryly on The Rest Is Money that caring for tenants as a landlord had been the toughest job she ever had.
Later that day the Chancellor was asked on LBC, perhaps mischievously, whether the Prime Minister, already lavishly pensioned after retirement as Director of Public Prosecutions, counts as a working person. ‘The Prime Minister gets his income from going out to work and working for our country,’ she said. ‘He’s a working person. He goes out to work.’
Payment and Incidence
Ultimately the major tax measure in the 2024 Budget was a rise in Employer National Insurance Contributions. To preserve the manifesto pledge, the Chancellor relied, not on a definition of the group of people involved, which was wide, but on the type of impact. She made a distinction between payment and incidence. Still not to be raised were taxes where the payments were actually made by working people: happily for her this was not true of Employer NICs. Able to be increased, however, were taxes where the incidence fell on working people: unhappily perhaps for them this was true of Employer NICs.
Redefining the Pledge, or Dropping It
Fast forward a year and the approach of the 2025 Budget has raised the definition again. It appears the definition of working people may be about to narrow considerably. Sky News obtained last week what it described as ‘an internal definition of “working people” used by the Treasury’, where ‘officials have been tasked with protecting the income of the lower two-thirds of working people’, estimated as people earning below around £46,000. If so the Manifesto pledge would be being retrospectively redefined as applying to only this sub-group of working people.
In addition the concept of ‘protecting income’ could also drastically water down the pledge for everyone. It would shift it from the level of each individual tax to the collective net impact of tax changes. The pledge had been understood as capping the level of individual taxes: ‘we will not increase National Insurance, the… rates of Income Tax, or VAT.’ That may no longer hold, even for the lower two thirds of workers. Rather, one or more of the broad-based taxes could be raised on the lower two thirds of workers, so long as the net impact of tax, or even overall fiscal, changes leaves the lower two thirds of workers no worse off. (This is the kind of thinking used in the ‘distributional analysis’ tables which accompany UK budgets, showing the net impact of budget measures on each percentile of income.)
Theologies of Work and Wealth
Much could be said about the economic wisdom of all this. No doubt it will be, including by us at CEME. For now I want rather to make a theological point about the whole debate. Theologically I would certainly give the government credit for their original pledge and their willingness to wrestle with a definition.
That is because they are acknowledging that work matters. And that is right. It matters to each of us, and to our neighbours, and to God. As Richard Turnbull puts it in Work as Enterprise: Recovering a Theology of Work, ‘Christian theology provides both a moral and a spiritual language about work – a language that conveys principles of enterprise, beauty and relationships’ (page17). There is a trace of this in the government’s pledge: an instinct to valorise work, to encourage it and to preserve as much as possible of a worker’s share of the fruits of their labour.
On the other hand the pledge, even as originally framed, has three drawbacks. First it risks creating a divisive narrative. It identifies one group, the real workers, who will be protected from tax increases, and an out group, who will not be. By making pledges only about income and consumption taxes, it also implies that the wealth which some work generates is somehow a particularly legitimate target for additional taxation, as Neil Jordan suggested last week. Perhaps the language was even intended to carry a hint of Marxist class analysis. But certainly it was about ‘othering’. (In that way it recalls equally unhelpful attempts in the past to distinguish the ‘deserving poor’ from those taken to be less deserving.) Of course choices have to be made about who pays what. Of course the argument of broader shoulders bearing heavier burden always has merit in any community. But setting the issue up in the language which hints at class conflict has many downsides.
Secondly identifying a sub-group as working people encourages a debased view of work. Surely most of the population aged 8 to 88 are working people. Retired people supporting charities with their time and wisdom are doing work. Family members who care for their loved ones are doing work. Even our young people at their studies and training are doing work, if of a preparatory kind. Richard Turnbull suggests definitional features of work (page 17) include: human activity which carries both intrinsic and extrinsic value; requiring physical, emotional or intellectual energy; resulting in human development; and providing for human need. Of course another important characteristic of much work is that it relates in some way to economic exchange, and that is also to be celebrated. But when the concept of work is deployed within a potentially divisive narrative about differential tax policy, it risks being narrowed. Something which should be seen as having, to use Tom Holland’s favourite word, a ‘sacral’ element, is reduced to the financial element of paid employment.
Finally the understanding of paid work which underlies this policy narrative seems outdated, if not nostalgic. Like the Prime Minister, I grew up with a cheque book. Now ‘just Monzo me, bro’, as the younger generation would say. But, more fundamentally, as Richard Turnbull’s thoughtful introduction also suggests, ‘work is not a static concept’ (page 7). Payroll employment remains the most significant form of paid work, but it is no longer the only form available. We have now had four industrial revolutions, not just one. To look ahead, at CEME we have already been working on, and are about to discuss, the issues raised by a fifth: the use of Artificial Intelligence, which has the potential to change the world of work.
Working Robots?
Over the next month it looks like some or all British working people may need to prepare for unwelcome fiscal news. Looking even further ahead, as the AI revolution accelerates, perhaps we will have to adopt Bill Gates’ suggestion and ‘tax the (Working) Robots’. I don’t know what political leverage robots will have, working or otherwise, but I fear they will find that Benjamin Franklin’s rule applies no less to them. If so they had better prepare like us for the two certainties of death (or at least obsolescence) and taxes.
Revd. Dr. Philip Krinks was recently appointed as Director of CEME.