Like Tony Blair, John McDonnell is cautious on raising taxes. Unlike Blair, he has misjudged the public mood Labour is ducking out of a hard conversation on income tax.

In 1996, Tony Blair and Gordon Brown’s aides had a falling-out over tax. Brown, then the Shadow Chancellor, wanted to introduce a new rate of tax for people earning above £100,000. But Blair, then still only the Leader of the Opposition, feared that it would make the Labour Party look as if it couldn’t be trusted on tax-and-spend (i.e. it would increase the size of the government at the taxpayer’s expense).

Brown and his team couldn’t believe it, the average income at the time being only a little over £15,000. So Brown’s chief economic adviser, a little-known economist by the name of Ed Balls, commissioned a series of focus groups from a pollster by the name of Deborah Mattinson, the founder of the consultancy BritainThinks.

Mattinson reveals what happened next in her excellent book Talking to a Brick Wall: she asked participants to match a series of attributes to salaries ranging from £20,000 to £200,000, with £100,000 as the half-way point. But all of the action took place in the bottom half of the scale: someone earning above £35,000 was “comfortable”, someone earning over £50,000 was “very well off” and anyone earning more than £70,000 (about £110,000 in today’s money) was “super rich”.

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So far, so good as far as Brown and his team were concerned. But then Mattinson asked what people thought of tax rises at £100,000, and the reaction was still uniformly hostile: because voters had so little trust for Labour on the issue.

The controversial tax cut

Now in 2018, a Labour Opposition is again heading into an election where it should be the favourite to win, and is again split over tax-and-spend. This time the argument is over people earning between £45,000 and £50,000, who will receive a tax cut announced by Philip Hammond in the Budget.

The Labour leadership has committed to maintaining the cut, which will benefit people who are overwhelmingly concentrated among the UK’s top quartile of earners. But a number of Labour backbenchers, including two of Jeremy Corbyn’s former leadership rivals, Andy Burnham and Yvette Cooper, have criticised the decision, while Corbyn’s inner circle is itself split on the issue.

Thanks to inflation, £50,000 in 1996 is a little more than £90,000 today, and Labour’s private polling – no longer the preserve of Mattinson but overseen by the party’s director of strategy, Carl Shoben – again shows that people regard those in that bracket as doing very well.

Someone earning £50,000, however – that’s not an income bracket that people see as wealthy. That is why Labour is proposing a tax increase for everyone earning more than £80,000 – but for everyone earning below that to pay no more than they do under the Conservatives. (For what it’s worth, according to public polling by YouGov, £60,000 and up is what most people regard as the crossover point for being “rich”.)

McDonnell will win out

One difference between 1996 and 2018 is that this time the fear is reversed. It is John McDonnell, the Shadow Chancellor, who fears that raising taxes on people earning £45,000 to £50,000 will mean that voters lose trust in Labour over tax-and-spend, while aides to Jeremy Corbyn think that there is public appetite for tax rises and not just on the rich.

As with Blair-Brown skirmishes, most of the action takes place between aides. Andrew Fisher, Corbyn’s policy chief, and an increasingly influential figure thanks to his authorship of the 2017 manifesto, and Corbyn’s own economic adviser, Mary Robertson, are not convinced that backing tax increases at £45,000 would be the kiss of death that John McDonnell’s economic adviser, James Meadway, fears that it would be.

Internal contests in the Labour Party are decided by one member, one vote (Omov), and the reality is that, for the most part, Labour’s economic policy is also decided by Omov: One McDonnell, One Vote. Caution over income tax will win the day.

But the important similarity with those 1996 focus groups and today, in my view at least, is that once again, it is the office of the Labour leader that is right and the Shadow Treasury which is misjudging the public mood. The condition of the public realm, and particularly the growing demands on the National Health Service, all mean that voters are willing to consider the idea of tax rises to pay for better public services.

And in policy terms, Labour cannot sustainably end austerity without broad-based tax increases. Ducking out on a hard conversation with the electorate about income tax might help the party to win an election. In government, it might yet have reason to regret the missed opportunity to make the case for higher tax.

Stephen Bush is special correspondent at ‘New Statesman’ magazine