Osborne torpedos Clegg's wealth tax

Chancellor says proposed tax would "drive away the wealth creators and the businesses".

The submarine Chancellor has risen to torpedo Nick Clegg's proposed wealth tax. In his first broadcast interview since returning from holiday, George Osborne told ITV: "I am clear that the wealthy should pay more which is why in the recent budget I increased the tax on very expensive property transactions. But we also have to be careful as a country we don’t drive away the wealth creators and the businesses that are going to lead our economic recovery." In other words, it's a non-starter.

Osborne's stance is short-sighted. As I wrote earlier, taxes on wealth are both more progressive and economically beneficial than those on income. By shifting investment away from unproductive assets and into wealth-creating industries, they can increase growth (something the British economy conspicuously lacks), rather than reduce it (as taxes on consumpation and income do). For the Tories, who cannot afford to be seen as the party of the rich in an age of austerity, heavier taxation of wealth also makes political sense. As ConservativeHome editor Tim Montgomerie argued this morning:

A reasonable wealth tax can be used by the Conservative Party to signal that we are not the party of the privileged and already propertied in the South East but also the party of the young northern entrepreneur or homebuyer who is starting out in life. More taxes on mansion owners in the south to fund less taxes on younger people starting out in life. If the Conservative Party embraces such a policy it's the nearest thing we have to a Clause IV moment

But Osborne, wedded to conservative dogma, is still unwilling to recognise as much.

George Osborne warned that a wealth tax risked "driving business away". Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Recess confidential: Labour's liquid party

Sniffing out the best stories from Westminster, including Showsec, soames, and Smith-side splits.

If you are celebrating in a brewery, don’t ask Labour to provide the drinks. Because of the party’s continuing failure to secure a security contractor for its Liverpool conference, it is still uncertain whether the gathering will take place at all. Since boycotting G4S, the usual supplier, over its links with Israeli prisons, Labour has struggled to find an alternative. Of the five firms approached, only one – Showsec – offered its services. But the company’s non-union-recognition policy is inhibiting an agreement. The GMB, the firm’s antagonist, has threatened to picket the conference if Showsec is awarded the contract. In lieu of a breakthrough, sources suggest two alternatives: the police (at a cost of £59.65 per constable per hour), or the suspension of the G4S boycott. “We’ll soon find out which the Corbynites dislike the least,” an MP jested. Another feared that the Tories’ attack lines will write themselves: “How can Labour be trusted with national security if it can’t organise its own?”

Farewell, then, to Respect. The left-wing party founded in 2004 and joined by George Galloway after his expulsion from Labour has officially deregistered itself.

“We support Corbyn’s Labour Party,” the former MP explained, urging his 522,000 Facebook followers to sign up. “The Labour Party does not belong to one man,” replied Jess Phillips MP, who also pointed out in the same tweet that Respect had “massively failed”. Galloway, who won 1.4 per cent of the vote in this year’s London mayoral election, insists that he is not seeking to return to Labour. But he would surely be welcomed by Jeremy Corbyn’s director of communications, Seumas Milne, whom he once described as his “closest friend”. “We have spoken almost daily for 30 years,” Galloway boasted.

After Young Labour’s national committee voted to endorse Corbyn, its members were aggrieved to learn that they would not be permitted to promote his candidacy unless Owen Smith was given equal treatment. The leader’s supporters curse more “dirty tricks” from the Smith-sympathetic party machine.

Word reaches your mole of a Smith-side split between the ex-shadow cabinet ministers Lisa Nandy and Lucy Powell. The former is said to be encouraging the challenger’s left-wing platform, while the latter believes that he should make a more centrist pitch. If, as expected, Smith is beaten by Corbyn, it’s not only the divisions between the leader and his opponents that will be worth watching.

Nicholas Soames, the Tory grandee, has been slimming down – so much so, that he was congratulated by Tom Watson, Labour’s deputy leader, on his weight loss. “Soon I’ll be able to give you my old suits!” Soames told the similarly rotund Watson. 

Kevin Maguire is away

I'm a mole, innit.

This article first appeared in the 25 August 2016 issue of the New Statesman, Cameron: the legacy of a loser