What Cameron and Clegg could learn from Churchill and Lloyd George

The People's Budget of 1909 introduced an array of unprecedented measures to tackle poverty and inequality. Its stated ambition was to be "a great step towards that good time, when poverty, and the wretchedness and human degradation which always follows in its camp, will be as remote to the people of this country as the wolves which once infested its forests". Among the radical policy measures harnessed to achieve this ambitious goal were a land tax and an increase to inheritance tax. The People's Budget had its most staunch champions in David Lloyd George and Churchill, known to their contemporaries as the "Terrible Twins".

The Budget to be proposed this Wednesday by the government under the leadership of David Cameron and Nick Clegg is not going to have comparable ambitions. The series of vitriolic attacks on the idea of a "mansion tax" is a good indicator that taxes on wealth would not meet with much enthusiasm in Westminster in the current climate. However, while remaining fiscally "neutral", this Budget is likely to have far reaching ideological repercussions. The two central proposals of the coalition partners: the Tory abolition of the 50p rate of income tax and the Lib Dem move towards the £10,000 income tax threshold -- if implemented -- have the potential to drive a wedge between the rich and the poor.

First, take the Tory idea of scrapping the 50p rate. The debate over the fiscal benefit of keeping the 50 per cent tax rate continues; politically, the die has been cast. This move is controversial -- as the Guardian/ICM poll reveals -- two thirds of voters are in favour of maintaining the 50p tax rate. Indeed, in terms of people's perceptions of fairness, it is relatively easy to see why lowering the income tax for the richest 1 per cent of earners who get at least 6 times the national median income, might be seen as exacerbating social inequalities. It might not be equally obvious why this should be the case with a policy once considered to be "political gold": the Lib Dem proposal to raise the level at which people start paying income tax to £10,000.

Scrutiny reveals that not all that glitters is gold. The Institute for Fiscal Studies recently showed that the £10,000 threshold for income tax is likely to benefit the richest households most, while leaving intact the plight of those who earn so very little that they don't even qualify to pay income tax. Even more problematically, it is also feared that this move could make a number of middle-income families lose child benefit and exacerbate the already dire financial situation of the "squeezed middle-class". What is particularly interesting in the context of this argument concerned with the impact of the Budget measures on the levels of inequality and the perception of fairness is that the proposal to lift a group of people beyond income tax will result in the stigmatisation of the poor as "undeserving".

There would be a big difference, on this proposal, between anyone earning £10,000 or less, who would pay no income tax at all, and those on middle incomes, who would get the first £10,000 they earn tax free. As Clegg himself observed once, the latter belong to a group of people "whose incomes are too high to qualify for welfare benefits, but too low to provide any real financial security". They are the "ordinary, hardworking people"; and they would be likely to hold in deep contempt those exempt from paying income tax altogether, and yet eligible to receive benefits -- that is, ordinary, often hardworking, but, in the opinion of middle Britain, "undeserving" people.

The reason is plain. The success of William Beveridge's legacy rests on the ideas, first, of linking together the notions of citizenship and welfare and, second, of using taxation as a bridge between citizens and the state. Contribution and entitlement are inexorably bound together, in the same way that citizens are bound to the state through taxation. What is at stake here is the sense of collective responsibility and identity. The proposal to exempt a group of people from their contractual obligation with the state is likely to have far reaching consequences for how these people are perceived by the rest of society. Lifting them out of the income tax net will result in a politics of us and them -- we are not all in it together since only some of us pay, since only some of us receive benefits. There is a better way of helping those who desperately need it: make them less poor by enforcing the living wage regulation, and make them more "deserving" by allowing them to exercise their citizenship responsibilities and requiring them to pay a very low marginal taxation rate on the first £10,000.

In the lead up to Budget day, the government of a nation eviscerated by inequalities -- where 40 per cent of all the wealth is owned by 5 per cent of the population and 70 per cent of approximately 60 million acres of land owned by less than 1 per cent of the population -- should not exacerbate the perception of unfairness. Needless to say, the most effective way of tackling these perceptions would be to change the reality. In order to tackle inequality in a serious way, the coalition government need a set of policies as radical as those introduced in 1909 by the government under Lloyd George and Winston Churchill when they put forward a proposal for a land value tax. Of course, the Terrible Twins' Bill was never implemented; it was opposed by the House of Lords as "a menace to property and a Socialistic spirit". Yet, for a short time it carried the promise of a Budget truly preoccupied with fighting inequalities. Sadly, if all goes according to plan and the two main ideas of the current coalition partners are implemented -- unlike the People's Budget of 1909 -- the 2012 Budget is likely to be commemorated as the Budget of Two Nations "between whom there is no intercourse and no sympathy [...] as if they were dwellers in different zones, or inhabitants of different planets: the rich and the poor."

Patricia Kaszynska is senior researcher and project manager at ResPublica

 

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Boris Johnson is right about Saudi Arabia - but will he stick to his tune in Riyadh?

The Foreign Secretary went off script, but on truth. 

The difference a day makes. On Wednesday Theresa May was happily rubbing shoulders with Saudi Royalty at the Gulf Co-operation Council summit and talking about how important she thinks the relationship is.

Then on Thursday, the Guardian rained on her parade by publishing a transcript of her Foreign Secretary, Boris Johnson, describing the regime as a "puppeteer" for "proxy wars" while speaking at an international conference last week.

We will likely never know how she reacted when she first heard the news, but she’s unlikely to have been happy. It was definitely off-script for a UK foreign secretary. Until Johnson’s accidental outburst, the UK-Saudi relationship had been one characterised by mutual backslapping, glamorous photo-ops, major arms contracts and an unlimited well of political support.

Needless to say, the Prime Minister put him in his place as soon as possible. Within a few hours it was made clear that his words “are not the government’s views on Saudi and its role in the region". In an unequivocal statement, Downing Street stressed that Saudi is “a vital partner for the UK” and reaffirmed its support for the Saudi-led air strikes taking place in Yemen.

For over 18 months now, UK fighter jets and UK bombs have been central to the Saudi-led destruction of the poorest country in the region. Schools, hospitals and homes have been destroyed in a bombing campaign that has created a humanitarian catastrophe.

Despite the mounting death toll, the arms exports have continued unabated. Whitehall has licensed over £3.3bn worth of weapons since the intervention began last March. As I write this, the UK government is actively working with BAE Systems to secure the sale of a new generation of the same fighter jets that are being used in the bombing.

There’s nothing new about UK leaders getting close to Saudi Arabia. For decades now, governments of all political colours have worked hand-in-glove with the arms companies and Saudi authorities. Our leaders have continued to bend over backwards to support them, while turning a blind eye to the terrible human rights abuses being carried out every single day.

Over recent years we have seen Tony Blair intervening to stop an investigation into arms exports to Saudi and David Cameron flying out to Riyadh to meet with royalty. Last year saw the shocking but ultimately unsurprising revelation that UK civil servants had lobbied for Saudi Arabia to sit on the UN Human Rights Council, a move which would seem comically ironic if the consequences weren’t so serious.

The impact of the relationship hasn’t just been to boost and legitimise the Saudi dictatorship - it has also debased UK policy in the region. The end result is a hypocritical situation in which the government is rightly calling on Russian forces to stop bombing civilian areas in Aleppo, while at the same time arming and supporting Saudi Arabia while it unleashes devastation on Yemen.

It would be nice to think that Johnson’s unwitting intervention could be the start of a new stage in UK-Saudi relations; one in which the UK stops supporting dictatorships and calls them out on their appalling human rights records. Unfortunately it’s highly unlikely. Last Sunday, mere days after his now notorious speech, Johnson appeared on the Andrew Marr show and, as usual, stressed his support for his Saudi allies.

The question for Johnson is which of these seemingly diametrically opposed views does he really hold? Does he believe Saudi Arabia is a puppeteer that fights proxy wars and distorts Islam, or does he see it as one of the UK’s closest allies?

By coincidence Johnson is due to visit Riyadh this weekend. Will he be the first Foreign Secretary in decades to hold the Saudi regime accountable for its abuses, or will he cozy up to his hosts and say it was all one big misunderstanding?

If he is serious about peace and about the UK holding a positive influence on the world stage then he must stand by his words and use his power to stop the arms sales and hold the UK’s "puppeteer" ally to the same standard as other aggressors. Unfortunately, if history is anything to go by, then we shouldn’t hold our breath.

Andrew Smith is a spokesman for Campaign Against Arms Trade (CAAT). You can follow CAAT at @CAATuk.