"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.

Getty
Show Hide image

The quiet civil war for control of the Labour grassroots machine

The party's newly empowered far left is trying to wrest control of local branches.

“Party time! PARTY TIME!” A young man wearing a Jeremy Corbyn t-shirt appears on screen and starts dancing, accompanied by flashing emojis of a red rose and a party popper.

“There’s only one game in town and it’s getting our boy J Corbz into Downing Street”, he announces, and to do that, he is planning to explain the “nitty gritty” of local Labour politics, and, promisingly, “give a little gossip on the way”. The man is Michael Walker of online left-wing outlet Novara Media, and the video has been watched more than 38,000 times on Facebook in just two weeks.

So why should Labour members suddenly be made to care about “structures, factions, conference, selections, rule changes”? “There were shedloads of people who got involved in the Labour Party for the first time by knocking on doors during the general election,” Walker explains, “but to make sure that the Labour Party represents their voices as it goes forward, they’re going to need to take getting involved in Labour’s bureaucratic structures seriously.

“There’s a risk that the party structures and bureaucracy will try and shut down participation in the Labour Party just like they did last summer, and we want to make sure that it can’t happen again.”

While the Parliamentary Labour Party is going into recess as a more united group since the election than it had been in the past two years, there is a quiet war still being fought at local level. Now that their man has proved that he could exceed expectations and turn Labour into a solid opposition, Corbynites want to make sure that the centrists cannot keep a hold on the internal party machine.

This involves projects like Walker’s catchy videos, and Momentum’s Your Labour Conference website, which encourages members to get interested in the election of the conference arrangements committee, in order to have more of a say on what gets discussed at the party’s annual conference.

“We recognise the fact that sometimes the Labour Party can be a bit of a labyrinth and something which can be pretty hard to work out, and we want to push people forward and help them get more involved,” a Momentum spokesperson says. “We’re trying to make it more open and more accessible to younger people and help people understand what’s going on.”

With tens of thousands of people joining Labour over the past few months – including around 20,000 since the election – their intentions seem noble: the Labour party internal structure is, after all, notoriously complex. However, it isn’t clear how the existing members who are involved in local organising – a lot of whom are or were until recently sceptical of Corbyn – will deal with this new influx of activists.

“Corbyn supporters are no longer the underdog in the party, and understandably people who joined recently are highly motivated to get their opinions across, so they’ve been turning up in droves at local meetings,” says Richard Angell, the director of Blairite organisation Progress.

“They’re not brilliantly organised but they’re there, and they turned up with this sense of 'we told you so', so they’re starting to win things that they wouldn’t have before the election.”

Centrist and centre-left Labour factions have often been the most organised campaigners in constituency Labour parties, and they’re now worried that if they were to get ousted, the party would suffer.

“Lots of our members are the people who hold the CLPs together – lots of people turned up in certain places to campaign, and the people who organised the clipboards, the data, did the work to make that happen are still a network of moderates,” Angell adds. “If Momentum tried to sweep them away in a vindictive wave of jubilation, it would backfire, and that’s what they have to think about now.”

Though the people at the helm of Momentum have never explicitly called for a takeover of the party at local level, some CLPs are struggling with bitter infighting. Lewisham is home to some of these battlegrounds. With three CLPs in the borough, the local Momentum branch is trying to gain more power in the local parties to implement the changes they want to see at that level.

“There’s an organised left-wing presence in all three CLPs in Lewisham,” a local Momentum organiser, who did not want to be named, says. “We want the CLPs to become outward-looking campaigning bodies, and we want them to be functionally democratic.”

What the branch also wants is to have a radical rethink of what Labour does at council level, and the activist was critical of what the councillors have been doing.

“Under the right-wing, Lewisham CLPs never really campaign on anything – they’ll occasionally have these set pieces, like the Labour day of action on education, which is good, but in reality there’s no one going campaigning on anything,” he says.

“The other thing is about the record of the council - no-one would deny that Labour councils are in a difficult situation, in terms of getting cut again and again and again, but equally at the moment, the attitude of a lot of Labour councils in Lewisham at least is 'it’s not just that there’s nothing else we could do, we’re actually going to go further than the Tories are demanding'."

“It’s not just that they’re saying 'oh, there’s not really anything we can do to fight back against cuts' but it’s also that they’ve actually absorbed all the neoliberal stuff.”

The response to these allegations from a long-term Labour member, who wants to remain anonymous but is close to the currently serving councillors, was unsurprising.

“It is utterly absurd to suggest that councillors want to cut services – Labour members stand for council because they want to stand up for their community and protect local services,” he says. 

“As for campaigning and taking on the Tories, it was the 'right-wing' Lewisham Council which took the government to the High Court over their plans to close Lewisham Hospital – and won. The 'right wing' CLPs worked tirelessly with the Save Lewisham Hospital campaign, and we won.”

According to him, Labour is doomed to fail if it doesn’t unite soon, and he worries that left-wing activists may be getting carried away. “The vast majority of members in Lewisham are really pleased with the result and with the way the party pulled together – locally and nationally – for the election campaign,” he says.

“At the second members' meeting after the election, we had a discussion about how we all needed to carry on in the spirit of unity that we'd recently seen, and that if we did so, we have a good chance of seeing a Labour government soon.”

“It's a shame that some people want to label, attack and purge fellow members, rather than working together to beat the Tories. The more they focus on internal, factional in-fighting, the less chance we will have of seeing a Labour government and ending the cuts.”

Beyond the ideological differences which, as the election showed, can mostly be smoothed over when the party senses that it’s getting close to power, an explanation for the Labour left’s occasional bullishness could be its sense of insecurity.

After all, the wave of new members who joined after Corbyn became leader was hardly welcomed by the party’s mainstream, and the narrative quickly turned to Trotskyist entryism instead.

Momentum also spent many of its formative months being treated with suspicion, as a Trojan horse aiming to get MPs deselected, which is yet to happen two years on. Painted as the opposition to the opposition, activists from the Labour’s left had become used to being party pariahs, and need to figure out what to do now that they are in a position of power.

“They’re behaving like an insurgency still, but they’re in charge”, says Angell. “It’s quite a big change in mindset for them, and one I don’t think they’re really ready for.”

“We have shown that we will campaign for the Labour Party anywhere in the country, whoever the candidate is, to try and get the best result in a general election, and there is no acknowledgement of that from them at all.”

This was, amusingly, echoed by the Momentum activist – if there is one thing all factions agree on, it seems to be that the Labour left needs to figure out what it wants from the party machine it’s in the process of inheriting.

“Momentum nationally had a very good election, it mobilised a lot of people to go to marginals, and got a lot of people involved in campaigning, and that’s a step forward, to go from getting people to vote Corbyn to getting them on the doorstep,” he says, “but it’s another step from actually having a vision of how to transform the Labour Party.”

Marie le Conte is a freelance journalist.