Why Nick Clegg's still taxing Cameron and Miliband

The Lib Dem leader and the coming Budget.

It remains a curiosity of today's political scene that a small and unpopular party bumping along on 7 to 10 per cent in opinion polls is making the waves on the central issue of tax policy. On this one issue at least, the two main parties find themselves reacting to the gauntlet the Liberal Democrats have laid down.

Nick Clegg's recent speech to the Resolution Foundation making the case for going further and faster in reaching a personal tax allowance of £10,000 has been widely reported as a significant moment in the genesis of the forthcoming budget which due to the precarious position of the economy, and the increasingly creaky nature of the Coalition, is destined to be a highly charged affair both fiscally and politically.

Significant it may have been, but not for the rather mundane reason that the leader of the Liberal Democrats made the case for delivering on one of his central manifesto commitments as soon as possible. Dog bites man.

It was, however, noteworthy for three less commented upon reasons.

First, because it was an attempt to signal the end of the Liberal Democrats "give and take" strategy in relation to those on low and middle incomes. Up until now each rise in the personal allowance (or indeed progress on other Liberal Democrat priorities) has been funded in large part by cuts to tax credits and increases in taxes that particularly hurt the precise group the Liberal Democrats state they are seeking to help.

Hitherto this has completely neutered their claims to being a force for tax fairness. Clegg's new and unmistakeable message is that this time it will be different. From now on the wealthy should pay for further increases in the tax allowance - whether through wealth taxes, less avoidance or cuts in higher rate pension tax-relief.

If Clegg can make this approach stick -- and that is a very big if -- it makes additional increases in the personal allowance a different political proposition for both the Conservatives (a straightforward hit to some of their core support) and Labour (why oppose?).

That said, this new and potentially more progressive approach to funding increased tax allowances may well be completely lost on the public given that deep cuts to tax credits already in the pipeline (based on previous budgets that Clegg signed up to) will bear down on the working poor for years to come.

Second, Clegg's budget intervention represented the next stage in the Lib Dem's differentiation strategy. They expect, but still don't know for sure, that Osborne will agree to some progress on personal allowances. But even if they fail their judgement is that they would be better to do so having at least have looked publicly distinct (even if ultimately ineffectual), rather than seeming to meekly go along with whatever Osborne ends up announcing.

Playing your budget hand quite so openly is a high-stakes move, and not one borne from a position of strength.

Finally, Clegg's open air budget negotiations have certainly turned up the heat on Labour. Over the last few weeks there have been many more column inches written about Liberal Democrat-Tory budget disagreements then there have been about the opposition's position.

Moreover, Clegg has stolen a march on his opponents both in terms of being the leader talking about taxing the rich and the one reported as caring about cutting income tax on the low paid. Right now it is he who is occupying this large swath of political terrain -- more baggy centre, then squeezed middle -- which is about rebalancing the tax system so it better chimes with our straightened times.

Labour to date have been largely silent on this tax rebalancing argument, though Ed Miliband has been nodding towards the need for increased taxes at the top. Ed Balls' intervention yesterday was significant therefore not just in that it broadened out Labour's position on tax cuts from VAT towards other measures, like personal allowances, that the coalition might actually move on. But it also succeeded in inserting Labour into the middle of the Budget debate.

All three parties face some delicate judgements over the next four weeks. George Osborne will need to balance carefully his instinctive reluctance (and that of his backbenchers) to hand a major victory to Clegg with the potentially destabilising effects for the Coalition of the Liberal Democrats coming away with nothing.

Labour will need to strain to explain to a sceptical public how its call for large tax cuts in the here and now fits with its renewed determination to reclaim fiscal responsibility over the medium term, a theme which was so much in evidence at the turn of the year. And they rapidly need to come up with ideas of their own to prove it is they who are best placed to lead the debate on tax fairness.

Meanwhile Clegg desperately needs to show that he can convert his recent media momentum on tax reform into a Budget victory -- and, more than that, into an upward tick in the polls.

Gavin Kelly is a former adviser to Downing Street and the Treasury. He tweets @GavinJKelly1.

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Don't blame Brexit on working-class anger - it's more worrying than that

White voters who identified as "English not British" backed Brexit.

For those of us who believe that the referendum result in favour of Brexit is an unmitigated disaster, the nominations for culprits are open. Former Liberal Democrat leader Nick Clegg made a compelling argument in the Financial Times that the blame lies squarely with Cameron and Osborne.

Clegg, who has first-hand experience of Tory duplicity, is scarcely a neutral observer. But that does not make him wrong. No doubt the PM and the Chancellor are the proximate cause, and should be held accountable by their parliamentary constituents, their party, and by the country as a whole - or what’s left of it if Scotland goes its own way.

Yet journalists and historians alike would do well to probe deeper causes of the referendum result. One obvious culprit is the British press, who, at best, failed to scrutinise the Leave Campaign’s claims and at worst actively abetted them. The New York Times has suggested that using the EU as a punching bag has helped sell papers (or at least generate clicks) in what is probably the most challenging climate for traditional journalism in two centuries.  Boris Johnson, it seems, is irresistible clickbait for the fourth estate. And as Nick Cohen has observed on Saturday, Johnson and Gove, both politician-journalists, have elevated mendacity in politics from an occasional vice to a lifestyle choice.

The search for deeper causes of the Brexit vote, however, cannot end with the press. A different electorate could have taken a different view, as they did in Scotland, which voted 2-1 to Remain.  What was the magic sauce?

Too many commentators, especially those on the Left, have blamed working-class anger. It’s all about social class, apparently. Lisa Mckenzie nearly predicted the result on that basis. Others use it simply to criticise Tory austerity politics. Blaming class can be woven into another favourite narrative - this is about lack of educational attainment. Anyone who has lived in Britain for any period of time knows the class system, the town-and-country divide, and intergenerational wealth disparities as important features of British life. 

Another favourite culprit is racism, as the Washington Post wondered on SaturdayOthers had the same thought, and racist attacks are on the rise. Given Nigel Farage’s antics in the weeks before the election, none of this is surprising. Amidst such scary stuff, many have tried to emphasise that most Brexit voters are not racist, but rather disillusioned with the rule of metropolitan elites. Douglas Carswell is one proponent of this argument, but he’s not alone. The Economist, in an effort to avoid talking about race, asserts that this result was about age, region and class.

Still, this kind of analysis is at best naïve and at worst disingenuous. 

As Lord Ashcroft’s polls suggest, it is only the white working class (if by this we mean C2/DE, though many in DE are unemployed) who voted for Brexit. In fact, those describing themselves as "in employment" generally voted to Remain. Those describing themselves as Asian, black or Muslims overwhelmingly voted Remain. By contrast, nearly six in ten white Protestants voted to leave. 

Brexit was a rejection of British multiculturalism. That is the real take-home message of the Ashcroft polls. Of those who see themselves as "English not British", 80 per cent voted to Leave, irrespective of social class. Those who see themselves as "British not English" voted 60 per cent for Remain. Similar patterns (and similar press involvement) can be found in the Quebec referendum of 1995, which failed by a narrower margin than Brexit succeeded.

Of non-Francophone voters in Quebec, 95 per cent voted to remain in Canada. Those who voted to leave, on the other hand, were rejecting Canadian multiculturalism. Quebecois separatism was seen as part of a struggle for cultural survival.  

Whether or not you call those attitudes racist, the advent of white English (and Welsh) nationalism is, for those of us who have taught modern European history, the truly ominous consequence of Brexit. Do not be fooled by the alternatives.

Dr D’Maris Coffman is a Senior Lecturer in Economics of the Built Environment at UCL Bartlett. Before coming to UCL in 2014, she was a Fellow and Director of Studies in History at Newnham College and a holder of a Leverhulme Early Career Fellowship in the Cambridge History Faculty.