Forget VAT -- why did they rule out a rise in income tax?

New Labour is not dead. It lives. Shame.

Who says "New Labour" is dead? Gordon Brown used the phrase seven times in his speech this morning in Birmingham, where he launched the party's general election manifesto.

The papers speculated on the Blairite tone of the document ahead of its publication -- including the Times, which predicted that the former leader's legacy would "flavour almost every page of Labour's manifesto".

And, lo and behold, the Ed Miliband-drafted document is indeed sprinkled with copious references to so-called public-service reform, from "personalised" welfare to "more responsive" police to "direct control" over services.

But it is on taxation that the Labour manifesto sounds so frustratingly conservative, cautious and, yes, Blairite. "We will not raise the basic, higher and new top rates of tax in the next parliament," it proudly proclaims, echoing the 1997, 2001 and 2005 pledges.

Hmm. Why not?

Isn't the Budget deficit £167bn? And doesn't the first of the manifesto's "50 steps to a future fair for all" pledge to employ "fair taxes" to help "halve the deficit by 2014"? Is there a fairer tax than income tax?

If there is, it ain't VAT -- which, in the words of the leading tax accountant Richard Murphy, "is intently regressive -- meaning that the burden of the tax falls much more heavily on low-earnings households than it does on those with higher income".

Modern social democracy has to revolve around progressive, not regressive, taxation. Income tax is at the heart of progressive taxation, but you might not have guessed it from Labour's period in office. For 12 years, the government refused to touch the top rate of tax -- until, that is, the financial crisis and ballooning national debt forced Alistair Darling to introduce a new top-rate tax of 50p on the 300,000 people who earn in excess of £150,000 per annum. And as I wrote back in October, in the magazine:

It is conveniently forgotten that Thatcher only cut the top rate of tax, from 60 per cent to the current 40 per cent, in 1988; for nine of her 11 years in power, the darling of the Tory right, the Mother Thatcherite, presided over a higher top rate of tax than the one now being introduced by the "socialist" Brown.

In fact, the basic rate was cut, not raised, during Labour's 13-year period in office to its current (low) level of 20p, a move paid for by the abolition of the 10p tax band on low earners -- which is thought to have contributed to the party's disastrous by-election defeat in Crewe and Nantwich in 2008.

So I'm disappointed to see Brown, Darling, Miliband et al pledging not to deviate from the old, outdated and cautious New Labour orthodoxy on income tax, while refusing to rule out a rise in regressive VAT. Have they learned nothing? The 50p top-rate tax has been hugely popular with voters; the abolition of the 10p rate has been unpopular and electorally damaging.

Times have changed. This is not the Seventies, nor even the Eighties. In the wake of the worst financial crisis in living memory, caused by bonus-hungry bankers and financiers, the public, in effect, wants the pips to squeak. Haunted by its demons and deferring to a right-wing media echo chamber, Labour -- or, should I say, "New Labour" -- has missed an open goal.

 

UPDATE: On the subject of progressive taxation, I forgot to add that the Lib Dems today launched a blistering but slightly disingenuous attack on Labour's "unfair" tax record, publishing an analysis of Treasury figures which shows that the amount of tax paid by the poorest has gone up over the past 13 years.

The Fabians' Sunder Katwala has issued a rejoinder here. And the economists Stuart Adam and Mike Brewer, from the Institute for Fiscal Studies, have responded thus:

The Liberal Democrats have, once again, claimed that the poor pay more of their income in tax than the rich, and that this gap has got larger under Labour. But, by ignoring the fact that the poor get most of this income from the state in benefit and tax credit payments, and by overstating the extent to which indirect taxes are paid by the poor, this comparison is meaningless at best and misleading at worst.

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Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

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PMQs review: Jeremy Corbyn prompts Tory outrage as he blames Grenfell Tower fire on austerity

To Conservative cries of "shame on you!", the Labour leader warned that "we all pay a price in public safety" for spending cuts.

A fortnight after the Grenfell Tower fire erupted, the tragedy continues to cast a shadow over British politics. Rather than probing Theresa May on the DUP deal, Jeremy Corbyn asked a series of forensic questions on the incident, in which at least 79 people are confirmed to have died.

In the first PMQs of the new parliament, May revealed that the number of buildings that had failed fire safety tests had risen to 120 (a 100 per cent failure rate) and that the cladding used on Grenfell Tower was "non-compliant" with building regulations (Corbyn had asked whether it was "legal").

After several factual questions, the Labour leader rose to his political argument. To cries of "shame on you!" from Tory MPs, he warned that local authority cuts of 40 per cent meant "we all pay a price in public safety". Corbyn added: “What the tragedy of Grenfell Tower has exposed is the disastrous effects of austerity. The disregard for working-class communities, the terrible consequences of deregulation and cutting corners." Corbyn noted that 11,000 firefighters had been cut and that the public sector pay cap (which Labour has tabled a Queen's Speech amendment against) was hindering recruitment. "This disaster must be a wake-up call," he concluded.

But May, who fared better than many expected, had a ready retort. "The cladding of tower blocks did not start under this government, it did not start under the previous coalition governments, the cladding of tower blocks began under the Blair government," she said. “In 2005 it was a Labour government that introduced the regulatory reform fire safety order which changed the requirements to inspect a building on fire safety from the local fire authority to a 'responsible person'." In this regard, however, Corbyn's lack of frontbench experience is a virtue – no action by the last Labour government can be pinned on him. 

Whether or not the Conservatives accept the link between Grenfell and austerity, their reluctance to defend continued cuts shows an awareness of how politically vulnerable they have become (No10 has announced that the public sector pay cap is under review).

Though Tory MP Philip Davies accused May of having an "aversion" to policies "that might be popular with the public" (he demanded the abolition of the 0.7 per cent foreign aid target), there was little dissent from the backbenches – reflecting the new consensus that the Prime Minister is safe (in the absence of an attractive alternative).

And May, whose jokes sometimes fall painfully flat, was able to accuse Corbyn of saying "one thing to the many and another thing to the few" in reference to his alleged Trident comments to Glastonbury festival founder Michael Eavis. But the Labour leader, no longer looking fearfully over his shoulder, displayed his increased authority today. Though the Conservatives may jeer him, the lingering fear in Tory minds is that they and the country are on divergent paths. 

George Eaton is political editor of the New Statesman.

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