I share the concerns of friends in the party about the rise of racism, nationalism and xenophobia in our increasingly illiberal world. The so-called “war on woke” is just code for prejudice against everything diverse, personal and self-expressive.
But as much as I fear we are heading down an all-too-familiar road towards fascism, I don’t believe the progressive response to the far right in this country is working. Too often we react with condemnation — important though that is — without tackling the economic conditions that allow prejudice to thrive in the first place.
Intolerance feeds on economic inequality and financial insecurity. It is always present, but its rise as the dominant malignancy in the political ecosystem often coincides with periods of economic stress.
The parallels with the 1930s are stark. Then, economic collapse created fertile ground for fascism, with the gutter press fanning the flames. Today, we feel the economy crumbling around us, which once again is generating anxiety and anger, and it’s the social media algorithms that are fanning the flames. Technology may change, but people remain the same.
The cost-of-living crisis is not new. It has been building for decades, leaving many communities hollowed out and resentful. Brexit, nationalism, anti-refugee protests, and Islamophobia have all been symptoms of that deeper malaise, cynically exploited by those who weaponise social discord.
If economics is poisoning the body politic, then treating racism and fascism as enemies to be “fought” head-on will not cure the disease. These poisons thrive when people feel insecure, powerless or forgotten. Unless we tackle the underlying economic and social inequalities, we are treating the symptoms, not the cause.
We need a bold, liberal programme to tackle inequality and restore fairness and hope in people’s lives. For Liberal Democrats, that means putting economic justice back at the heart of our politics — and meaning it.
Yes, that requires long-term investment in jobs, decent housing, public services and local communities — all of which we champion. But those investments take time to bear fruit, and for too many people struggling today, they will come too late to make a difference to their lives — or their voting choices.
That’s why we must start with tax reform. Our current system is broken and deeply regressive. It punishes those with the least and rewards those with the most.
Council tax — a badly designed relic of the 1990s — falls hardest on those with lower incomes, while income tax has become steadily less progressive. Rishi Sunak’s 2021 freeze on tax thresholds was a stealth tax on working people, extended by Jeremy Hunt and now likely to be prolonged by Rachel Reeves (no relation!).
With council tax rising by 5% a year and frozen thresholds dragging more low earners and pensioners into paying tax, it’s little wonder that many feel the system is rigged — and want to “burn it all down”.
Daisy Cooper was right to warn Reeves that continuing the freeze would repeat the Conservatives’ mistakes and drag more low earners into tax. I applaud her words — but we must go further. If we are to rebuild trust, we must show that we are on the side of the working poor and those who feel left behind by economic orthodoxy.
After the Second World War, Britain chose to rebuild on the foundations of fairness: the NHS, the welfare state, and wider access to education. Those reforms didn’t magically end prejudice, but they did reduce the insecurity that fascism feeds on. People felt safer, more hopeful, and less vulnerable to the politics of fear.
That is the lesson we need to relearn today. Condemning racism and authoritarianism is vital — but it is not enough. We must address the economic conditions that corrode trust and drive division.
Liberal Democrats should be unapologetic in making this case. If we are serious about defeating racism and authoritarianism — and their underlying causes — we must show we can deliver economic security as the foundation of a liberal society.
Now is the moment for our party to lead that argument. Let’s make the case, together, for economic security and a liberal society.
* Tom Reeve is a Liberal Democrat councillor in Kingston upon Thames
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11 Comments
So what tax changes are you proposing? Or changes to the way the economy is run?
Good question, Tim. The short answer is, we need to start by acknowledging the problem and then we need to hammer out liberal economic solutions.
For instance, much has been written about the impact of the freezing of the tax thresholds on the “average” earner, with many complaints about the “unfair” 60% effective tax rate when you hit the £100,000 earnings threshold. But very little is said about the impact of below-median wage earners, about how the bottom decile are dragged into tax and face huge increases in their effective rate of taxation. The economist Victor Bulmer-Thomas wrote an interesting piece for the LSE blog on this. Economic security is at the root of personal freedom, and our party should scream from the rafters about this. https://blogs.lse.ac.uk/politicsandpolicy/what-a-drag-the-impact-of-the-frozen-personal-allowance-on-those-with-lower-incomes/
Neither politicians nor the progressive media are talking much about this. In a timely coincidence, this article appeared in The Guardian this morning https://www.theguardian.com/commentisfree/2025/oct/09/rising-bills-cost-of-living-patriotism-flags-keir-starmer.
The author sets out the shocking under-reporting of the cost of living crisis in his own newspaper. And points to research from the Joseph Rowntree Foundation showing that “the poorest families would really suffer, losing more than £1,000 a year in disposable income”.
Where is the discussion about this? Who is shouting about this?
At Conference, very little was said about the cost-of-living crisis. Ed alluded to it in his speech, but the solutions he offered were a deal with Europe, solar panels and a rebasing of energy pricing. Very technical economist stuff which no doubt will help a little.
For too long, liberalism has been a conversation between people who are doing alright. It’s time to change that.
A fantastic piece — I couldn’t agree more with your argument that the rise of racism, nationalism and xenophobia can’t just be met with condemnation, but must be understood through the lens of economic insecurity and inequality. You’ve hit upon a truth that’s often forgotten: when people feel powerless or left behind, fear and resentment take root — and opportunists exploit that.
I also share you sympathises we should talk far more about those root causes of nationalism and division — how economic anxiety, income insecurity, and the cost of living crisis have made people feel abandoned and angry. It’s one that can often get ignored.
While I can’t pretend to have all the solutions, I do think we need to completely uproot our tax system. It’s overly complex and deeply unfair — with far too many schedules and loopholes that mean a salaried worker often pays more tax than someone earning far more through shares or capital gains. We need a frank national conversation about simplifying the tax regime — even if that means reducing nominal income tax rates but merging them under a single “cashflow tax.”
And alongside that, perhaps a national Land Value Tax could raise funds fairly, help the poorest, and also stops the issue regarding capital flight.
As Jo Grimond once said: “It is always more difficult to appeal to man’s reason and better judgement than to his conservativism or his selfishness. But the more difficult appeal must be made. There can be no free or peaceful world unless it succeeds.”
I also agree ‘that the rise of racism, nationalism and xenophobia can’t just be met with condemnation, but must be understood through the lens of economic insecurity and inequality. … when people feel powerless or left behind, fear and resentment take root — and opportunists exploit that.’
I do hope that the Party’s Economics Working Group will develop a bold liberal programme to tackle inequality, reduce poverty, provide enough jobs for everyone who wants one, enough homes for everyone to have one, provide enough financing to restore public services to the levels that people expect them to be. I wish I had confidence that this will happen. We need to scrap the fiscal rules we had in our last general election manifesto, which would restrict the amounts the government can invest in the economy.
I have submitted motions to Conference calling for the replacement of Council Tax with a fair proportional tax, but it has not yet been selected for debate. I hope that it will be before 2029.
The Party should resurrect its policy to increase the income tax personal allowance and add to it increasing the National Insurance threshold.
Very good article, and well put. Key point – ‘tackling the economic conditions that allow prejudice to thrive in the first place’. Here here !
Just one quick question. As ever, in policy matters, the primary and often tricky task is to define the problem you are trying to solve. With your emphasis on tax policy, Tom, are you proposing that the main problem causing economic decline and falling living standards is ‘tax policy’, especially too many people on low incomes being caught in the tax net ?
I agree with much of this analysis, yet we risk overlooking a crucial dimension of the far-right’s ascent.
Rory Stewart recently recounted a revealing conversation with a German politician who observed a striking shift: AfD posters, once confined to economically depressed neighbourhoods, now appear with equal frequency in the windows of homes with BMWs parked outside. Similarly, Reform UK draws substantial support from middle-class voters. What germinates in soil of economic anxiety can metastasise rapidly across class boundaries.
This pattern becomes less surprising when we consider research suggesting that roughly 30% of any democratic population exhibits what Adorno termed the “authoritarian personality”—characterised by rigid conformity, fear of change, deference to authority, binary thinking, and hostility toward those perceived as racially, religiously, or culturally different.
Under conducive political and cultural conditions, this latent third will coalesce behind far-right movements. More troubling still: their allegiance persists even as these parties, once in power, systematically dismantle the rule of law and erode democratic institutions. The authoritarian impulse, it seems, is not primarily economic but psychological—a standing reservoir waiting for the right moment to flood the mainstream.
I absolutely agree with this article.
I too agree with Tom that economics is top priority not culture wars. I also agree with Andy Chandler especially that economic insecurity breeds discontent that turns people towards the racist, nationalistic, xenophobic leaders who promise so much. I also agree with Andy’s point about tax, but there are other factors at play too, such as the school curriculum and housing. all of which contribute to economic inequality even though they take time for that effect on people’s lives to be seen.
There is a difference between the most important issue and the battlefield. Economics is the underlying cause and culture wars mainly a symptom but if we, as a third party, choose it as a battlefield, we may not find anyone to fight on it.
It does not help that all parties have members with wildly differing views on economics. Farage on his own covers a large spectrum of right and left. It doesn’t help us that most of the people Liberals would most like to fight for economically are in areas of Liberal Democrat desert.
” Unless we tackle the underlying economic and social inequalities, we are treating the symptoms, not the cause. We need a bold, liberal programme to tackle inequality”
True. But I can’t see how you are going to avoid the label “socialist” rather than “liberal” being applied to whatever you come up with. Unless, of course, it isn’t that ‘bold’ and doesn’t “tackle inequality”.
There has to be a wealth tax to do that. I can’t see any previous mention of this on this thread. Income taxes won’t do it. The wealthy don’t need to pay themselves much income. They simply “borrow” using the collateral of their wealth as security for cheap loans. The interest on these is even tax deductible! It’s termed the “buy, borrow, die strategy”
https://www.dcfpi.org/all/how-wealthy-households-use-a-buy-borrow-die-strategy-to-avoid-taxes-on-their-growing-fortunes/
I so agree with your article Tom – but I think that as Lib Dems we could look at another aspect. Austerity doesn’t work, but money is not the only resource. The nation’s biggest resource is its people. Where we are lacking in money we are not always lacking in time and energy, especially among the active retired contingent. During the two wars we managed to pull together in a common cause. During Covid we saw what a strong sense of community exists in most parts of the country. We are a nation of volunteers, ready to help each other. For example, many communities now have repair cafes. But volunteers need direction and coordination. As a party priding itself on localism could we not rise to this challenge given the right leadership? I remember the days of ‘bob-a-job’ when scouts and cubs used to raise money by doing simple things such as washing cars, cutting grass or weeding flowerbeds, but we have adults with life skills who could help with all sorts of challenges, from house repairs to how to budget and prepare inexpensive, nutritious meals. Loneliness is a problem, but lonely people working together can provide the solution. Social cooperation and cohesion is the antidote to what Farage and his followers are endorsing. It might seem idealistic, but can we not at least start a very public conversation on these lines – prominently led by our party?