On inheritance tax there is a "credibility gap"

Cameron's plan remains unfair and unfunded

David Cameron has denounced Alistair Darling's 148-page dossier on the "credibility gap" in the Tories' spending plans as "complete junk from start to finish". So are the Tories' spending commitments fully costed? Here's one that isn't.

Cameron claimed again today that sweeping cuts in inheritance tax could be paid for by "taxing the non-doms". The party's pledge to raise the inheritance-tax threshold -- currently £325,000 -- to £1m would cost £3.1bn a year. Cameron hopes to raise this amount by charging non-doms £25,000 a year to live and work in the UK. The Tories estimate that about 150,000 residents would pay the levy, raising £3.5bn and funding cuts in inheritance tax and a rise in the stamp duty threshold to £250,000 for first-time buyers.

But the Tory proposal overestimates the total number of non-doms. The latest HMRC figures show that there are only 120,000 currently registered. Ken Clarke was admirably honest when he conceded: "We don't know how many non-doms will be here; we don't know how much our policy of raising fair taxation from foreigners who work in this country will raise." It's a pity his leader can't be.

The commitment to cut inheritance tax could yet become politically toxic for the Tories, particularly if the suspicion that a Cameron government would increase VAT grows. History teaches us that when in need of revenue, the Tories raise VAT, the most regressive tax of all.

It was Margaret Thatcher who almost doubled VAT from 8 to 15 per cent in 1979 in order to slash income tax and it was John Major who raised VAT by 2.5 per cent to its current level of 17.5 per cent.

Over at Comment Central, Daniel Finkelstein astutely notes that Darling himself still refuses to rule out raising VAT to 20 per cent. The Chancellor's plan to do so in the pre-Budget report was overruled by Gordon Brown. By contrast, Ed Balls (writing outside of his brief) has accused the Tories of secretly plotting to increase VAT and has attacked George Osborne for refusing -- like Darling -- to rule out a rise.

Balls might be keen to use these lines on the campaign trail, but VAT could yet become a dividing line between him and the man he still longs to replace.

 

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George Eaton is political editor of the New Statesman.

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Why isn't Labour putting forward Corbynite candidates?

Despite his successes as a candidate, the organisational victories have gone the way of Corbyn's opponents. 

The contest changes, but the result remains the same: Jeremy Corbyn’s preferred candidate defeated in a parliamentary selection. Afzhal Khan is Labour’s candidate in the Manchester Gorton by-election and the overwhelming favourite to be the seat’s next MP.

Although Khan, an MEP, was one of  the minority of Labour’s European MPs to dissent from a letter from the European parliamentary Labour party calling for Jeremy Corbyn to go in the summer of 2016, he backed Andy Burnham and Tom Watson in 2015, and it is widely believed, fairly or unfairly, that Khan had, as one local activist put it, “the brains to know which way the wind was blowing” rather than being a pukka Corbynite.

For the leader’s office, it was a double defeat;  their preferred candidate, Sam Wheeler, was kept off the longlist, when the party’s Corbynsceptics allied with the party’s BAME leadership to draw up an all ethnic minority shortlist, and Yasmine Dar, their back-up option, was narrowly defeated by Khan among members in Manchester Gorton.

But even when the leadership has got its preferred candidate to the contest, they have been defeated. That even happened in Copeland, where the shortlist was drawn up by Corbynites and designed to advantage Rachel Holliday, the leader’s office preferred candidate.

Why does the Labour left keep losing? Supporters combination of bad luck and bad decisions for the defeat.

In Oldham West, where Michael Meacher, a committed supporter of Jeremy Corbyn’s, was succeeded by Jim McMahon, who voted for Liz Kendall, McMahon was seen to be so far ahead that they had no credible chance of stopping him. Rosena Allin-Khan was a near-perfect candidate to hold the seat of Tooting: a doctor at the local hospital, the seat’s largest employer, with links to both the Polish and Pakistani communities that make up the seat’s biggest minority blocs.  Gillian Troughton, who won the Copeland selection, is a respected local councillor.

But the leadership has also made bad decisions, some claim.  The failure to get a candidate in Manchester Gorton was particularly egregious, as one trade unionist puts it: “We all knew that Gerald was not going to make it [until 2020], they had a local boy with good connections to the trade unions, that contest should have been theirs for the taking”. Instead, they lost control of the selection panel because Jeremy Corbyn missed an NEC meeting – the NEC is hung at present as the Corbynsceptics sacrificed their majority of one to retain the chair – and with it their best chance of taking the seat.

Others close to the leadership point out that for the first year of Corbyn’s leadership, the leader’s office was more preoccupied with the struggle for survival than it was with getting more of its people in. Decisions in by-elections were taken on the hop and often in a way that led to problems later down the line. It made sense to keep Mo Azam, from the party’s left, off the shortlist in Oldham West when Labour MPs were worried for their own seats and about the Ukip effect if Labour selected a minority candidate. But that enraged the party’s minority politicians and led directly to the all-ethnic-minority shortlist in Manchester Gorton.

They also point out that the party's councillor base, from where many candidates are drawn, is still largely Corbynsceptic, though they hope that this will change in the next round of local government selections. (Councillors must go through a reselection process at every election.)

But the biggest shift has very little to do with the Labour leadership. The big victories for the Labour left in internal battles under Ed Miliband were the result of Unite and the GMB working together. Now they are, for various reasons, at odds and the GMB has proven significantly better at working shortlists and campaigning for its members to become MPs.  That helps Corbynsceptics. “The reason why so many of the unions supported Jeremy the first time,” one senior Corbynite argues, “Is they wanted to move the Labour party a little bit to the left. They didn’t want a socialist transformation of the Labour party. And actually if you look at the people getting selected they are not Corbynites, but they are not Blairites either, and that’s what the unions wanted.”

Regardless of why, it means that, two years into Corbyn’s leadership, the Labour left finds itself smaller in parliament than it was at the beginning.  

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.