Osborne aims to scrap the 50p rate by 2013

Chancellor pencils in 2013 as the earliest possible opportunity to remove the top rate.

George Osborne made his ambition to scrap the 50p tax rate clear in last month's Budget. "[T]he 50 pence tax rate would do lasting damage to our economy if it were to become permanent. That is why I regard it as a temporary measure," he said.

Now, for the first time, we learn that the Chancellor has "pencilled in" 2013 as the earliest possible opportunity to remove the top rate. It's no coincidence that this is the same year that the public-sector pay freeze ends. Osborne, a keen political strategist, won't want to hand a tax cut to the richest 1 per cent until he can provide relief elsewhere. But I'd still expect Labour to contrast the "temporary" 50p rate with the "permanent" VAT rise.

HM Revenue and Customs is about to begin its review of how much money the new rate brings in and, as David Laws revealed last month in the Financial Times, the Treasury believes that the bulk of the revenue expected from the 50p rate is "lost in avoidance". I'd be surprised if the top rate raises £2.4bn a year (the initial Treasury forecast) but I'd still expect the Chancellor to benefit.

Those who claim that the new rate will bring in no revenue are fond of pointing out that Treasury receipts increased after Nigel Lawson reduced the top rate from 60 per cent to 40 per cent in 1988. But this had less to do with the Laffer curve than the fact that fiscal drag (when earnings rise faster than tax thresholds) meant high numbers of people were sucked into the 40p band, more than compensating for the removal of the 60p band.

In the meantime, Labour needs to establish a fixed position on the 50p rate. Since Ed Miliband became leader, he has described the top rate as "permanent", although Alan Johnson's tenure as shadow chancellor brought a greater emphasis on merely retaining it "for this parliament". At the same time, Ed Balls has suggested that reducing the starting threshold from £150,000 to £100,000 is still an option.

Then again, the shadow chancellor has also warned against turning "rates into principles" and has emphasised that "the principle is the tax system should be progressive". This leaves open the possibilty of Labour supporting the removal of the 50p rate in favour of a range of new property taxes.

As Balls appeared to suggest, in the event that the 50p rate raises little or no revenue, his party may need a plan B.

George Eaton is political editor of the New Statesman.

Getty
Show Hide image

The 8 bits of good news about integration buried in the Casey Review

It's not all Trojan Horses.

The government-commissioned Casey Review on integration tackles serious subjects, from honour crimes to discrimination and hate crime.

It outlines how deprivation, discrimination, segregated schools and unenlightened traditions can drag certain British-Pakistani and Bangladeshi communities into isolation. 

It shines a light on nepotistic local politics, which only entrench religious and gender segregation. It also charts the hurdles faced by ethnic minorities from school, to university and the workplace. There is no doubt it makes uncomfortable reading. 

But at a time when the negative consequences of immigration are dominating headlines, it’s easy to miss some of the more optimistic trends the Casey Report uncovered:

1. You can always have more friends

For all the talk of segregation, 82 per cent of us socialise at least once a month with people from a different ethnic and religious background, according to the Citizenship Survey 2010-11.

More than half of first generation migrants had friends of a different ethnicity. As for their children, nearly three quarters were friends with people from other ethnic backgrounds. Younger people with higher levels of education and better wages are most likely to have close inter-ethnic friendships. 

Brits from Black African and Mixed ethnic backgrounds are the most sociable it seems, as they are most likely to have friends from outside their neighbourhood. White British and Irish ethnic groups, on the other hand, are least likely to have ethnically-mixed social networks. 

Moving away from home seemed to be a key factor in diversifying your friendship group –18 to 34s were the most ethnically integrated age group. 

2. Integrated schools help

The Casey Review tells the story of how schools can distort a community’s view of the world, such as the mostly Asian high school where pupils thought 90 per cent of Brits were Asian (the actual figure is 7 per cent), and the Trojan Horse affair, where hardline Muslims were accused of dominating the curriculum of a state school (the exact facts have never come to light). 

But on the other hand, schools that are integrated, can change a whole community’s perspective. A study in Oldham found that when two schools were merged to create a more balanced pupil population between White Brits and British Asians, the level of anxiety both groups felt diminished. 

3. And kids are doing better at school

The Casey Report notes: “In recent years there has been a general improvement in educational attainment in schools, with a narrowing in the gap between White pupils and pupils from Pakistani, Bangladeshi and African/Caribbean/Black ethnic backgrounds.”

A number of ethnic minority groups, including pupils of Chinese, Indian, Irish and Bangladeshi ethnicity, outperformed White British pupils (but not White Gypsy and Roma pupils, who had the lowest attainment levels of all). 

4. Most people feel part of a community

Despite the talk of a divided society, in 2015-16, 89 per cent of people thought their community was cohesive, according to the Community Life Survey, and agreed their local area is a place where people from different backgrounds get on well together. This feeling of cohesiveness is actually higher than in 2003, at the height of New Labour multiculturalism, when the figure stood at 80 per cent. 

5. Muslims are sticklers for the law

Much of the Casey Report dealt with the divisions between British Muslims and other communities, on matters of culture, religious extremism and equality. It also looked at the Islamophobia and discrimination Muslims face in the UK. 

However, while the cultural and ideological clashes may be real, a ComRes/BBC poll in 2015 found that 95 per cent of British Muslims felt loyal to Britain and 93 per cent believed Muslims in Britain should always obey British laws. 

6. Employment prospects are improving

The Casey Review rightly notes the discrimination faced by jobseekers, such as study which found CVs with white-sounding names had a better rate of reply. Brits from Black, Pakistani or Bangladeshi backgrounds are more likely to be unemployed than Whites. 

However, the employment gap between ethnic minorities and White Brits has narrowed over the last decade, from 15.6 per cent in 2004 to 12.8 per cent in 2015. 

In October 2015, public and private sector employers responsible for employing 1.8m people signed a pledge to operate recruitment on a “name blind” basis. 

7. Pretty much everyone understand this

According to the 2011 census, 91.6 per cent of adults in England and Wales had English as their main language. And 98.2 per cent of them could speak English. 

Since 2008-2009, most non-European migrants coming to the UK have to meet English requirements as part of the immigration process. 

8. Oh, and there’s a British Muslim Mayor ready to tackle integration head on

The Casey Review criticised British Asian community leaders in northern towns for preventing proper discussion of equality and in some cases preventing women from launching rival bids for a council seat.

But it also quoted Sadiq Khan, the Mayor of London, and a British Muslim. Khan criticised religious families that force children to adopt a certain lifestyle, and he concluded:

"There is no other city in the world where I would want to raise my daughters than London.

"They have rights, they have protection, the right to wear what they like, think what they like, to meet who they like, to study what they like, more than they would in any other country.”

 

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