"Brown's mistake" has already been reversed

The personal allowance has grown to undo any losses the abolition of the 10p rate inflicted.

Ed Miliband has committed to introducing a mansion tax, and using the money to fund a re-introduction of the 10p tax band, saying:

We would tax houses worth over £2 million. And we would use the money to cut taxes for working people. We would put right a mistake made by Gordon Brown and the last Labour government. We would use the money raised by a mansion tax to reintroduce a lower 10 pence starting rate of tax, with the size of the band depending on the amount raised. This would benefit 25 million basic rate taxpayers.

The original 10 pence tax band was applied on incomes between £0 and £2,230, once the personal allowance was taken into account. Its abolition was used to fund the reduction in the basic rate of tax from 22p to 20p. But while Miliband says he will "put right [the] mistake made by Gordon Brown", he's not going to be reversing the basic rate cut. Instead, the money will come from the mansion tax.

But the Social Market Foundation's Ian Mulheirn points out that that mansion tax is not expected to raise anywhere near as much as two per cent on the basic rate of tax would. He tells me that their expectation for a mansion tax on houses over £2m is in the low billions — probably around £2bn or £3bn.

But every billion pounds raised would only pay for a 10p tax band of between two and three hundred pounds, he says:

We've got about 30 million income taxpayers in the UK, once you take the personal allowance into account. Assuming that they all would benefit by the full amount, then if you've got £1bn to play with, you could have a tax band of about £330.

A tax band of £330 would return £33 to each taxpayer. If the mansion tax raises the high end of estimates, then the band could be around £1000, returning £100 to each taxpayer. That's not to be sniffed at, but it's less than half of the size of the abolished band. It's not putting right Brown's mistake, but it ameliorates it slightly.

But actually, Brown's mistake has already been largely put right.

In 2007, the last year of the 10p tax rate, the personal allowance stood at £5,035. With the 10p band on top, basic rate tax started at £7,265. Uprated for inflation, that will be worth slightly under £9000 in the tax year starting in 2013.

In that same year, the personal allowance will stand at £9,440. Someone who would in 2007 have been paying only the 10p tax rate is today paying no tax at all. Miliband's actions, if introduced in 2015, will likely introduce a reduced tax rate for people earning between £10,000 and £11,000 to complement a zero tax rate for people earning less than that. That's likely a good thing; but it's a new thing, not a reversal of Brown's actions. They have already been undone.

Of course, if you have to delve into uprating tax bands by inflation to prove a point, it's not going to fly very well in political debates. That's why, as George writes, politically, the move is a masterstroke.

Brown walks through Rugby. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Watch Ian Paisley Jr thank Martin McGuinness for partnership that "saved lives"

The son of Ian Paisley said he "humbly" thanked the man who was both his father's enemy, and then friend. 

Northern Irish politics started 2017 at a low point. The First Minister, the Democratic Unionist Arlene Foster, is embroiled in scandal - so much so that her deputy, Sinn Féin's Martin McGuinness, resigned. Then McGuinness confirmed speculation that he was suffering from a serious illness, and would be resigning from frontline politics altogether. 

But as Ian Paisley Jr, the son of the Democratic Unionist founder Ian Paisley and a DUP politician himself, made clear, it is still possible to rise above the fray.

Paisley Sr, a firebrand Protestant preacher, opposed the Good Friday Agreement, but subsequently worked in partnership with his old nemesis, McGuinness, who himself was a former member of the IRA. Amazingly, they got on so well they were nicknamed "The Chuckle Brothers". When Paisley Sr died, McGuinness wrote that he had "lost a friend".

Speaking after McGuinness announced his retirement, Paisley Jr wished him good health, and then continued: 

"The second thing I'm going to say is thank you. I think it's important that we actually do reflect on the fact we would not be where we are in Northern Ireland in terms of having stability, peace and the opportunity to rebuild our country, if it hadn't been for the work he did put in, especially with my father at the beginning of this long journey.

"And I'm going to acknowledge the fact perhaps if we got back to some of that foundation work of building a proper relationship and recognising what partnership actually means, then we can get out of the mess we're currently in."

Questioned on whether other unionists "dont really get it", Paisley Jr retorted that it was time to move on: "Can we please get over that. Everyone out there has got over it. We as the political leaders have to demonstrate by our actions, by our words, and by our talk that we're over that."

He said he was thanking McGuinness "humbly" in recognition of "the remarkable journey" he had been on. The partnership government had "not only saved lives, but has made lives of countless people in Northern Ireland better", he said. 

 

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.