Broke Britain must move on from Robin Hood governments

UK Prime Minister Keir Starmer with Chancellor of the Exchequer Rachel Reeves. Getty

Per Wikipedia, there are two versions of Robin Hood: one a libertarian who lashes out against those who impose exorbitant tax, the other a socialist who believes in the redistribution of wealth. The latter is the man more familiar to modern audiences – and palatable to the UK's Labour party voters - but I wonder if it’s the guy who refuses to be railroaded by the government that Britain actually needs.

That’s because Britain is broke. There’s a £51 billion (almost $69 billion) hole in the budget that the Labour government must fix and yes, for avoidance of doubt, it was previous Conservative governments that left it there. But it is in consistently placing the burden of funding the many on the few that Britain has ceased to be an island of economic opportunity, and instead devolved into an enclave of the over-taxed and under-invested.

That’s because the majority of those who enjoy Britain’s welfare system are not the people paying to support it. Britain’s mid-income workers pay less income tax than any other western nation in the G7. In fact, those making around £37,480, the medium full-time salary in the UK in 2024, are paying the lowest percentage of income and payroll taxes since 1990. Meantime, 60 per cent of Britain’s tax income is paid by the top 10 per cent of workers, those people making above the £70,000 threshold; and 29 per cent of all income tax revenue comes from the top 1 per cent of that number.

It is in consistently placing the burden of funding the many on the few that Britain has ceased to be an island of economic opportunity

Labour’s disastrous 2024 budget, with its punitive tax regime, forced a now well-documented exodus of the super-rich; for many, the prospect of continuing to prop up and perpetuate a failing nanny state while losing tax exemption on worldwide income spurred them to the exit. But it’s the government’s refusal to come up with proposals to bring them back or keep the ones sticking around that should have everyone worried.

To be clear, the impact of their departure has yet to be properly factored into government forecasts, but the outlook is grim. Non-doms paid £8.9 billion in taxes in 2022-23 and it’s difficult to imagine the government won’t be losing money once the official body count is in.

For more than 30 years, successive governments have been playing Robin Hood to the British public, taxing the rich to pay for the poor. Labour, for good reason, has continued to prop up those with less: wages have not increased in line with inflation, and there is a lack of productivity across the economy that has kept politicians wary of raising the “sacred cow” of tax hikes. But with less coming in and more going out, the government is now practising false economics in continuing to force out its top 10 per cent. And the idea that these people would return without at least some commitment to helping them carry the weight from the broader public is a fantasy.