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The Fabians are Labour’s oldest think tank, founded to provide the intellectual underpinnings for gradual socialist reform.
But over the years, they have become much more technocratic and aligned with Labour’s leadership line — especially under Keir Starmer and Rachel Reeves.
This story, from The Guardian, indicates that the organisation has fallen a long way:
The influential Labour thinktank the Fabian Society is urging Rachel Reeves to raise £12bn in next month’s budget by extending the freeze on income tax thresholds for another two years.
Joe Dromey, the Fabians’ general secretary, argues in a new report that the move is the “best available option” for the chancellor as she seeks to offset the impact of weaker economic forecasts in her 26 November statement.
Dromey describes extending the threshold freeze as “an effective and progressive way to raise over half the funding that she needs, with most coming from wealthier households, and with relatively little political risk”.
Starting in 2022 as the UK recovered from the costs of the Covid pandemic, Rishi Sunak froze the thresholds at which workers move into a higher income tax band instead of increasing them each year in line with inflation.
Jeremy Hunt as chancellor extended that pause but it is set to end in 2027/28. Over that time, the OBR estimates that the freeze will have brought in an additional £45bn a year.
Dromey, the general secretary quoted in the piece, is a centrist policy operator — formerly at the Resolution Foundation and previously a Labour parliamentary candidate. His framing of the tax freeze as “progressive” depends entirely on modelling assumptions that wealthier households bear more of the cost in cash terms.
That may be true numerically, but it obscures the distributional effect — which hits earners whose wages rise only just in line with inflation much harder than those whose income comes from property, capital, or top-level salaries.
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What the tax threshold freeze actually does
“Fiscal drag” — freezing thresholds instead of uprating them with inflation — raises billions without changing the nominal tax rate. But it does so by stealth: people pay more tax just for keeping up with prices, not because they’re any better off.
This erodes living standards and suppresses disposable income among precisely the people Labour claims to champion — lower- and middle-income earners.
It’s a deeply regressive mechanism in real terms, even if it looks “progressive” on paper due to the headline revenue shares.
In practice, this is Sunak and Hunt’s austerity-by-stealth strategy — and it is extraordinary that the Fabian Society now appears to be endorsing and extending it.
Why they are advocating it
There are a few likely motives:
-
Political caution: Reeves has boxed herself in with her “fiscal rules” and pledge not to raise income tax rates. The Fabians are trying to find ways to raise money without breaking those pledges.
-
Perception management: Calling a stealth tax “progressive” allows Labour to argue they’re being responsible while not frightening the wealthy donor class or the City.
-
Technocratic detachment: The modern Fabian line often treats economic management as a numbers game rather than a question of social justice. That’s the legacy of the Blair–Brown era.
So, in essence, this looks like the Fabians providing intellectual cover for a policy that would hurt ordinary working people but maintain Labour’s “fiscal credibility” narrative with the media and business elite.
Internal contradictions
The Fabians and some Labour MPs are split on this issue, as the report concedes:
Liam Byrne, who leads the business and trade committee, advocates taxing wealth – including property – more heavily to tackle inequality.
He calls for several reforms to that end, including a shake-up of inheritance tax so that taxes are levied based on how much someone receives over their lifetime rather than the size of the estate. Byrne also proposes replacing council tax and stamp duty with an annual charge based on property values and levying a windfall tax on the banks.
He said: “We will not defeat populism without higher levies on wealth. We will not rebuild Britain without restoring fairness to Britain’s taxes. And we will not restore faith in politics until people see that the rules of the game apply to everyone, from the factory floor to the boardroom and beyond.”
Dromey argues for the threshold freeze — hitting earners; Liam Byrne, on the other hand, calls for higher taxes on wealth — property, inheritance, banks.
That shows the underlying tension within Labour and its policy circles: between the technocrats (Reeves/Dromey) and the traditional social democrats (Byrne).
In effect, Labour is being pulled in two directions — between a Treasury orthodoxy that prioritises “credibility” over redistribution, and its own ideological roots in fairness and equality.
What’s really going on
The Fabians are flying a kite ahead of Reeves’s Budget.
By floating this idea through the think tank, Labour can see how the public and media respond before the Chancellor herself commits.
If the backlash is mild, we can expect this policy — or something very close to it — to appear in the November Budget as a supposedly “responsible” measure that “protects public services without raising tax rates”.
It isn’t. And the fact that the Fabians are pushing it shows just how far to the Right Labour has drifted.
Far enough that Labour MPs might as well be sitting in the Tories’ laps.
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Why is Labour’s oldest thinktank now supporting this Tory stealth tax?
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But over the years, they have become much more technocratic and aligned with Labour’s leadership line — especially under Keir Starmer and Rachel Reeves.
This story, from The Guardian, indicates that the organisation has fallen a long way:
Dromey, the general secretary quoted in the piece, is a centrist policy operator — formerly at the Resolution Foundation and previously a Labour parliamentary candidate. His framing of the tax freeze as “progressive” depends entirely on modelling assumptions that wealthier households bear more of the cost in cash terms.
That may be true numerically, but it obscures the distributional effect — which hits earners whose wages rise only just in line with inflation much harder than those whose income comes from property, capital, or top-level salaries.
What the tax threshold freeze actually does
“Fiscal drag” — freezing thresholds instead of uprating them with inflation — raises billions without changing the nominal tax rate. But it does so by stealth: people pay more tax just for keeping up with prices, not because they’re any better off.
This erodes living standards and suppresses disposable income among precisely the people Labour claims to champion — lower- and middle-income earners.
It’s a deeply regressive mechanism in real terms, even if it looks “progressive” on paper due to the headline revenue shares.
In practice, this is Sunak and Hunt’s austerity-by-stealth strategy — and it is extraordinary that the Fabian Society now appears to be endorsing and extending it.
Why they are advocating it
There are a few likely motives:
Political caution: Reeves has boxed herself in with her “fiscal rules” and pledge not to raise income tax rates. The Fabians are trying to find ways to raise money without breaking those pledges.
Perception management: Calling a stealth tax “progressive” allows Labour to argue they’re being responsible while not frightening the wealthy donor class or the City.
Technocratic detachment: The modern Fabian line often treats economic management as a numbers game rather than a question of social justice. That’s the legacy of the Blair–Brown era.
So, in essence, this looks like the Fabians providing intellectual cover for a policy that would hurt ordinary working people but maintain Labour’s “fiscal credibility” narrative with the media and business elite.
Internal contradictions
The Fabians and some Labour MPs are split on this issue, as the report concedes:
Dromey argues for the threshold freeze — hitting earners; Liam Byrne, on the other hand, calls for higher taxes on wealth — property, inheritance, banks.
That shows the underlying tension within Labour and its policy circles: between the technocrats (Reeves/Dromey) and the traditional social democrats (Byrne).
In effect, Labour is being pulled in two directions — between a Treasury orthodoxy that prioritises “credibility” over redistribution, and its own ideological roots in fairness and equality.
What’s really going on
The Fabians are flying a kite ahead of Reeves’s Budget.
By floating this idea through the think tank, Labour can see how the public and media respond before the Chancellor herself commits.
If the backlash is mild, we can expect this policy — or something very close to it — to appear in the November Budget as a supposedly “responsible” measure that “protects public services without raising tax rates”.
It isn’t. And the fact that the Fabians are pushing it shows just how far to the Right Labour has drifted.
Far enough that Labour MPs might as well be sitting in the Tories’ laps.
Support Vox Political!
With social media algorithms acting as gatekeepers – allowing users to read only what their owners want them to, sites like Vox Political need the support of our readers like never before.
You can help by making a donation:
https://Ko-fi.com/voxpolitical
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