How progressive is this government?

The outcome of the CGT row may be an indicator.

My column in this week's magazine explores how "progressive" this new coalition government of "liberal Conservatives" and Liberal Democrats actually is. Progressive is, of course, a notoriously nebulous, woolly and, therefore, contested term.

My argument is that a progressive political philosophy has to be defined, at its core, by its attitude towards the poor and -- especially -- towards the gap between rich and poor, and the need to reduce that gap.

One of the more progressive measures suggested by the coalition government is the proposal to raise capital gains tax (CGT), currently set at 18 per cent on all gains above £10,100 a year, to a level closer to that of income tax -- potentially up to 40 or even 50 per cent.

To tax unearned income is essential to tackling inequalities in income and wealth. It is, therefore, an inherently progressive policy.

How else do do we know that it's progressive? Because David Davis and John Redwood are opposed to it.

But will the coalition buckle under pressure from the Thatcherite back benches? Vince Cable, the Business Secretary, has told BBC News that "it's not actually an argument between the coalition partners, as I understand it, it's an argument between a few Conservative backbenchers and others".

He also said:

It's very important that we have wealth taxed in the same way as income. At present it is quite wrong and it is an open invitation to tax avoidance to have people taxed at 40 per cent or potentially 50 per cent on their income, but only taxed at 18 per cent on capital gains. It leads to large-scale tax avoidance. So, for reasons of fairness and practicality, we have agreed that the capital gains tax system needs to be fundamentally reformed.

He's right, of course. But whether or not he -- and the other Liberal Democrats in this new government -- are able to stick to their guns on CGT, and resist the right-wingers, will be a crucial test of the coalition's progressive credentials.

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.

Getty
Show Hide image

Lord Sainsbury pulls funding from Progress and other political causes

The longstanding Labour donor will no longer fund party political causes. 

Centrist Labour MPs face a funding gap for their ideas after the longstanding Labour donor Lord Sainsbury announced he will stop financing party political causes.

Sainsbury, who served as a New Labour minister and also donated to the Liberal Democrats, is instead concentrating on charitable causes. 

Lord Sainsbury funded the centrist organisation Progress, dubbed the “original Blairite pressure group”, which was founded in mid Nineties and provided the intellectual underpinnings of New Labour.

The former supermarket boss is understood to still fund Policy Network, an international thinktank headed by New Labour veteran Peter Mandelson.

He has also funded the Remain campaign group Britain Stronger in Europe. The latter reinvented itself as Open Britain after the Leave vote, and has campaigned for a softer Brexit. Its supporters include former Lib Dem leader Nick Clegg and Labour's Chuka Umunna, and it now relies on grassroots funding.

Sainsbury said he wished to “hand the baton on to a new generation of donors” who supported progressive politics. 

Progress director Richard Angell said: “Progress is extremely grateful to Lord Sainsbury for the funding he has provided for over two decades. We always knew it would not last forever.”

The organisation has raised a third of its funding target from other donors, but is now appealing for financial support from Labour supporters. Its aims include “stopping a hard-left take over” of the Labour party and “renewing the ideas of the centre-left”. 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

0800 7318496