UK Government – The Poll Tax

Following entry is a record in the “Catalogue of Catastrophe” – a list of failed or troubled projects from around the word.


British Government – Prime Minister’s Office
Project : The Community Charge (the Poll Tax)
Project type: Changes to the taxation system
Date : Mar 1990
Cost : Unknown

Synopsis :
With politics likely to be a big part of the 2020 story, I thought I’d touch on how projects are sometimes the demise of politicians (even the highest and mightiest). As a case in point it’s worth thinking back to the days of Margret Thatcher in the United Kingdom and how her historic career was ended by a failed project. Despite becoming the first female Prime Minister of the United Kingdom and despite earning the reputation as the “Iron Lady”, her pet ‘poll tax’ project was the self-inflicted wound that brought her down.

Historically local services in the United Kingdom had been paid for through a tax on the value of homes. In such a system a fixed amount is charged for a given house independently of the number of people living in it. The net effect was that people in lower valued properties and those where there are many people living in a property, paid less than those living in high valued properties or those homes with fewer residents.

In Thatcher’s ideology such a system was an inequality. Politically, her view was that given that every citizen benefits from local services (water, sewer, policing, roads, etc.) every individual should pay. No matter how rich or poor, Thatcher saw it as a civic responsibility for each individual to contribute equally (with adjustments for students, those with very little income or others who were temporarily not in a position to pay fully). Thatcher’s vision dictated that the rich person cosseted in the Georgian mansion should pay the same as the poor person crammed into the Victorian slum.

In practical terms Thatcher’s ‘poll tax’ shifted the tax burden from those in the upper echelons of society to those at the lower end. As most will quickly see, such a shift is likely to be unpopular. There are more people at the lower end of the socio-economic scale than there are at the top, so the policy was clearly going to lack support. Despite her political capabilities and understanding of how to navigate the halls of power, it appears Mrs Thatcher had a blind spot. She failed to appreciate the basics of ‘Change Management‘ or how strong the ‘resistance to change’ reaction would be.

Despite the clear and present risk, Thatcher used her personal political capital to make the new policy the law of the land. Ignoring the input of her advisors and despite a clear public backlash, the new tax system went into effective in Apr 1990. The reaction was swift and harsh. The United Kingdom was rocked by riots as political fault lines fractured in the streets.

Politicians are elected by the public, but to stay in power, political leaders need the support of their party. The riots were the blood the dissenters in Thatcher’s Conservative party had been waiting for and by November the iron lady’s power had been melted down. Losing the confidence of her party, she resigned and was replaced by John Major. The poll tax policy was reversed and taxes on local services reverted to a model akin to what had been in place before.

Although Thatcher’s legacy is long and multi-faceted, the poll tax will forever been seen as black mark that finalized her political demise.

Contributing factors as reported in the press :
Lack of shared vision. Failure to understand ‘change management’ principles. Attempting to drive through a politically unpopular project simply through force of will. Lack of situational awareness. Arrogance (ideology over common sense and a failure to listen to staff, experts and stakeholders).

Reference links :

  1. Poll tax (Great Britain)
  2. Witness: Thatcher’s dramatic 1990 fall – “Stabbed in the front”

 

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