Purchase today

Enter your email address here to receive updates from the team.

Jobs

User login

The Staggers

The New Statesman’s rolling politics blog

RSS

A winning message for Miliband?

The Labour leader should pledge to scrap the VAT increase, not merely condemn it.

By George Eaton Published 03 January 2011 10:36

Like 2010, 2011 begins with Labour and the Conservatives at war over the economy. Last year it was Alistair Darling attacking the Tories' £34bn "black hole", this year it's Ed Miliband condemning tomorrow's VAT rise. The Labour leader will take to the campaign trail in Oldham East and Saddleworth (the first big electoral test of his leadership) and attack the increase as the "wrong tax, at the wrong time".

On paper, this should be an easy win for Miliband. The VAT increase is unfair (as David Cameron noted in April 2009, "it hits the poorest the hardest"), unnecessary and economically reckless. In his campaign against the rise, Miliband can also count on the support of some unfamiliar allies, including the Taxpayers' Alliance and the Daily Mail. And he can handily remind voters that it was the Lib Dems who warned of a "Tory VAT bombshell" (before joining the assault) and Cameron who insisted during the general election campaign that he had "absolutely no plans" to raise the tax.

Miliband will say: "Today we start to see the Tory-led agenda move from Downing Street to your street. At midnight VAT goes up, hitting people's living standards, small businesses and jobs. The VAT rise is the most visible example of what we mean when we say the government is going too far and too fast."

But if he's to win over the voters, he will need to rebut the charge that Labour's profligacy made the tax rise "unavoidable". Miliband should point out that the VAT increase was only required to pay for tax cuts elsewhere: £12.4bn of the £13.5bn to be raised could have been saved, had the government not cut other taxes including corporation tax, council tax, National Insurance and income tax.

As Robert Chote noted in May, while he was still director of the Institute for Fiscal Studies: "When Mr Osborne said that 'the years of debt and spending' made the £13bn increase in VAT unavoidable you might just as well say it was his desire to cut other taxes that made it so."

After this, Miliband should pledge to scrap the rise, not merely condemn it. On too many issues, from the Spending Review to tuition fees to education, Labour's attack has been blunted by the lack of a clear alternative. This mistake must not be repeated.

Special Offer: Get 12 issues of New Statesman magazine for just £12

Tags: VAT rise Ed Miliband VAT

More from George Eaton

View the discussion thread.

15 comments

Tue, 2011-01-04 16:12 — Robert Taggart

Ed Miliband, whether a student / politician = stupid boy !

Thu, 2011-10-27 14:18 — Alice (not verified)

Thanks for providing the news! There's a lot to talk about.
In any case you can convert wma to mp3 free using http://wmatomp3converterfree.net/

Tue, 2011-10-25 12:57 — marilynlucas11 (not verified)

You need a vob file player!
http://vobplayer.org/

Mon, 2011-09-05 13:54 — Wendy (not verified)

So the news is that VAT is increasing ... Too bad they didnt come up with an alternative... Anyway Youtube to mp3 http://videotomp3converter.com/ is a good free converter to download audio files from Youtube. I found many videos related to VAT rise and I'm thinking of discussing them at the seminars at my university.

Mon, 2011-01-03 11:12 — mcquade

The problem is he is too timid to formulate an alternative policy.

Mon, 2011-01-03 11:45 — Orange Booker (not verified)

On the whole I agree the "wrong tax, wrong time" approach and as a man of limited means I'm not looking forward do the double VAT/Transport fares clobbering. Also as a Lib Dem the memory of the "Tory Tax Bombshell" posters leaves a bad taste in my mouth.

However I take issue with this:

£12.4bn of the £13.5bn to be raised could have been saved had the government not cut other taxes including corporation tax, council tax, National Insurance and income tax.

Lets consider these in turn:

With corporation tax cut, if it encourages investment from abroad then we're going to get more from this in the long run in the form of direct taxation and job creation. Its too early to judge yet.

Council tax hasn't been cut its been frozen. Semantics aside, its also a regressive tax in that the poor pay a higher proportion of their income than the rich do. So your solution is to replace one regressive tax rise with another??

NI is a tax on jobs which is the last thing we need at the moment. Furthermore it too will affect people's direct income if employers pass it on to their employees.

Cutting Income tax for the lowest paid is an excellent measure, why should the very low paid simultaneously pay tax and receive benefits unless it is to tie them in physically and emotionally to the welfare state? Unfortunately the benefit of lower income tax will be negated by the VAT increase but hopefully that can be reversed before too long.

George - the alternatives you propose are just as unatractive and just as likely to impact on the low paid to squeezed middle demographic as the VAT rise is. Its not like the Tories cut IHT after all...

Mon, 2011-01-03 12:08 — iainburnshill

Yes. Put forward proposals for alternative government. No one wants to hear the winging of the defeated.

Mon, 2011-01-03 13:03 — ang (not verified)

The Tories always look after their own ie the rich, big business and the bankers. Everything they propose favours the rich.
Ordinary working people are being asked to foot the bill, in order to please the rich and keep the Tories in power, it's just outrageous!

Mon, 2011-01-03 13:07 — Robert Taggart

A winning message ? - too late. He will forever be reminded of his gaff at PMQ's - "I was once a student politician" - to which his opponents pointed and replied "you still are" and most of his 'supporters' remained silent !

Mon, 2011-01-03 13:31 — Lou (not verified)

Better a student politician than an armchair one methinks.

And actually the Labour benches were far from silent in supporting Miliband in that PMQs.

Mon, 2011-01-03 14:32 — swatantra

2011 will again be dominated by the 'Labour Leadership Question' just like 2010 was, when Labour should be concentrating on hanging the Tories out to dry. Ed doesn't unfortunately look like PM material,but then there is no identikit picture of what a PM should look like,in the same way that Rompuoy doesn't look like the President of the EU Commission, mor like a taxcollector from Brussels.

Mon, 2011-01-03 19:42 — Richard Richard (not verified)

You do seem to have a short memory. Remember this? Alistair Darling's plan to increase VAT

Enjoy!

Mon, 2011-01-03 20:01 — swatantra

And you seem to forget that Labour cut VAT to 15% for one year to help small businesses and the economy.
This Tory increase is going to slow down the economy and throw people out of jobs and home.
So contemplate.

Mon, 2011-01-03 20:45 — Dave C (not verified)

Robert Taggart misremembers the exchange.

Cameron: He is behaving like a student politician and, frankly, that is all he will ever be.

Edward Miliband: Mr Speaker, I was a student politician, but I was not hanging around with people who were throwing bread rolls and wrecking restaurants.

[That's a reference to the Bullingdon Club, Robert.]

http://bit.ly/i9Rlbw

Mon, 2011-01-03 21:36 — ang (not verified)

@Robert Taggart. Milibands' admission to being a student, was a preamble to critisism of Cameron and co, for their thuggish behaviour as students.
@ Richard richard.
Labour looked at a VAT rise and decided against it.
@ Swatantra. You are right that there is no identikit for a leader. David miliband was my favourite, but, because of his looks, etc, he would have been hounded by the press and become a liability. Ed, on the other hand, is unknown and can build a persona, which I think will attract the younger generation, aswell as the sqeezed middle. It's a chess game and it has to played slowly, intelligently and not letting your opponent know your next move. Ed is a good chess player and his opponents are weak.