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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Let's seize our chance of a progressive alliance in Richmond - or we'll all be losers

Labour MPs have been brave to talk about standing aside. 

Earlier this week something quite remarkable happened. Three Labour MPs, from across the party’s political spectrum, came together to urge their party to consider not fielding a candidate in the Richmond Park by-election. In the face of a powerful central party machine, it was extremely brave of them to do what was, until very recently, almost unthinkable: suggest that people vote for a party that wasn’t their own.
Just after the piece from Lisa Nandy, Clive Lewis and Jonathan Reynolds was published, I headed down to the Richmond Park constituency to meet local Green members. It felt like a big moment – an opportunity to be part of something truly ground-breaking – and we had a healthy discussion about the options on the table. Rightly, the decision about whether to stand in elections is always down to local parties, and ultimately the sense from the local members present was that it would be difficult  not to field a candidate unless Labour did the same. Sadly, even as we spoke, the Labour party hierarchy was busily pouring cold water on the idea of working together to beat the Conservatives. The old politics dies hard - and it will not die unless and until all parties are prepared to balance local priorities with the bigger picture.
A pact of any kind would not simply be about some parties standing down or aside. It would be about us all, collectively, standing together and stepping forward in a united bid to be better than what is currently on offer. And it would be a chance to show that building trust now, not just banking it for the future, can cement a better deal for local residents. There could be reciprocal commitments for local elections, for example, creating further opportunities for progressive voices to come to the fore.
While we’ve been debating the merits of this progressive pact in public, the Conservatives and Ukip have, quietly, formed an alliance of their own around Zac Goldsmith. In this regressive alliance, the right is rallying around a candidate who voted to pull Britain out of Europe against the wishes of his constituency, a man who shocked many by running a divisive and nasty campaign to be mayor of London. There’s a sad irony in the fact it’s the voices of division that are proving so effective at advancing their shared goals, while proponents of co-operation cannot get off the starting line.
Leadership is as much about listening as anything else. What I heard on Wednesday was a local party that is passionate about talking to people and sharing what the Greens have to offer. They are proud members of our party for a reason – because they know we stand for something unique, and they have high hopes of winning local elections in the area.  No doubt the leaders of the other progressive parties are hearing the same.
Forming a progressive alliance would be the start of something big. At the core of any such agreement must be a commitment to electoral reform - and breaking open politics for good. No longer could parties choose to listen only to a handful of swing voters in key constituencies, to the exclusion of everyone else. Not many people enjoy talking about the voting system – for most, it’s boring – but as people increasingly clamour for more power in their hands, this could really have been a moment to seize.
Time is running out to select a genuine "unity" candidate through an open primary process. I admit that the most likely alternative - uniting behind a Liberal Democrat candidate in Richmond Park - doesn’t sit easily with me, especially after their role in the vindictive Coalition government.  But politics is about making difficult choices at the right moment, and this is one I wanted to actively explore, because the situation we’re in is just so dire. There is a difference between the Conservatives and the Lib Dems. Failing to realise that plays into the hands of Theresa May more than anyone else.
And, to be frank, I'm deeply worried. Just look at one very specific, very local issue and you’ll perhaps understand where I'm coming from. It’s the state of the NHS in Brighton and Hove – it’s a system that’s been so cut up by marketisation and so woefully underfunded that it’s at breaking point. Our hospital is in special measures, six GP surgeries have shut down and private firms have been operating ambulances without a license. Just imagine what that health service will look like in ten years, with a Conservative party still in charge after beating a divided left at another general election.
And then there is Brexit. We’re hurtling down a very dangerous road – which could see us out of the EU, with closed borders and an economy in tatters. It’s my belief that a vote for a non-Brexiteer in Richmond Park would be a hammer blow to Conservatives at a time when they’re trying to remould the country in their own image after a narrow win for the Leave side in the referendum.
The Green party will fight a passionate and organised campaign in Richmond Park – I was blown away by the commitment of members, and I know they’ll be hitting the ground running this weekend. On the ballot on 1 December there will only be one party saying no to new runways, rejecting nuclear weapons and nuclear power and proposing a radical overhaul of our politics and democracy. I’ll go to the constituency to campaign because we are a fundamentally unique party – saying things that others refuse to say – but I won’t pretend that I don’t wish we could have done things differently.

I believe that moments like this don’t come along very often – but they require the will of all parties involved to realise their potential. Ultimately, until other leaders of progressive parties face the electoral facts, we are all losers, no matter who wins in Richmond Park.


Caroline Lucas is the MP for Brighton Pavilion.