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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Will Jeremy Corbyn stand down if Labour loses the general election?

Defeat at the polls might not be the end of Corbyn’s leadership.

The latest polls suggest that Labour is headed for heavy defeat in the June general election. Usually a general election loss would be the trigger for a leader to quit: Michael Foot, Gordon Brown and Ed Miliband all stood down after their first defeat, although Neil Kinnock saw out two losses before resigning in 1992.

It’s possible, if unlikely, that Corbyn could become prime minister. If that prospect doesn’t materialise, however, the question is: will Corbyn follow the majority of his predecessors and resign, or will he hang on in office?

Will Corbyn stand down? The rules

There is no formal process for the parliamentary Labour party to oust its leader, as it discovered in the 2016 leadership challenge. Even after a majority of his MPs had voted no confidence in him, Corbyn stayed on, ultimately winning his second leadership contest after it was decided that the current leader should be automatically included on the ballot.

This year’s conference will vote on to reform the leadership selection process that would make it easier for a left-wing candidate to get on the ballot (nicknamed the “McDonnell amendment” by centrists): Corbyn could be waiting for this motion to pass before he resigns.

Will Corbyn stand down? The membership

Corbyn’s support in the membership is still strong. Without an equally compelling candidate to put before the party, Corbyn’s opponents in the PLP are unlikely to initiate another leadership battle they’re likely to lose.

That said, a general election loss could change that. Polling from March suggests that half of Labour members wanted Corbyn to stand down either immediately or before the general election.

Will Corbyn stand down? The rumours

Sources close to Corbyn have said that he might not stand down, even if he leads Labour to a crushing defeat this June. They mention Kinnock’s survival after the 1987 general election as a precedent (although at the 1987 election, Labour did gain seats).

Will Corbyn stand down? The verdict

Given his struggles to manage his own MPs and the example of other leaders, it would be remarkable if Corbyn did not stand down should Labour lose the general election. However, staying on after a vote of no-confidence in 2016 was also remarkable, and the mooted changes to the leadership election process give him a reason to hold on until September in order to secure a left-wing succession.

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