Miliband’s mansion tax retoxifies the Tory brand – and portrays the Lib Dems as helpless hostages

The Tories' opposition to a mansion tax puts them on the wrong side of the new divide in British politics.

George Osborne knows better than most how tax pledges can wrong-foot a government. It was his promise at the 2007 Conservative conference to raise the inheritance-tax threshold to £1m, funded by an annual levy of £25,000 on non-domiciled taxpayers, that spooked Gordon Brown into calling off an early election and earned Osborne his reputation as his party’s sharpest political brain. Labour MPs still wince at the memory of the subsequent “magpie Budget” in which Alistair Darling, under orders from Brown, sought to mimic Osborne’s proposals.

Five and a half years later, it is the Tories who have been blindsided by Labour’s version of Osborne’s gambit. Like the shadow chancellor in 2007, Ed Miliband twinned a popular tax cut (a 10p rate of income tax) with a popular tax rise (a “mansion tax”) and positioned himself on the side of the middle classes. In the Labour camp, there is satisfaction at how the speech has succeeded in defining the pre-Budget terms of debate. It is a sign of Miliband’s enhanced stature that his proposals are now being discussed on the assumption that there is a good chance of them becoming law. The tax pledge has reassured those MPs previously troubled by the party’s lack of emblematic policies. As one frontbencher told me, “It passes the doorstep test.”

It was the Conservative MP Robert Halfon who originally proposed a reintroduced 10p tax rate as an artful piece of Tory detoxification. When I met him in his Commons office the day before Miliband’s speech, he lamented how Labour’s “brilliant” campaign against the abolition of the 50p tax rate had defined the Tories as “a party only interested in cutting taxes for millionaires”. Polling shows that just 9 per cent of the public believe the Conservatives best represent the interests of low-paid public-sector workers, while just 14 per cent believe they best represent their private-sector counterparts. By bringing back the 10p rate on income above the personal allowance and by funding it through the revenue generated by the 45p rate, Halfon argued that the Conservatives could prove that they believed in “tax cuts for the many, not just the few”.

The proposal won the support of key Osborne allies, including his former chief of staff Matthew Hancock, and was earmarked by the Treasury for inclusion in the 2014 Budget. Yet following Miliband’s deft act of political plagiarism, it is now off the table. Unlike Brown in 2007, Osborne has no intention of dancing to the opposition’s tune. Instead, he has sought to give the coalition’s policy of raising the personal allowance a harder edge by branding it as a “zero per cent tax rate”. This, he said, would be “more attractive at an election than a 10 per cent tax rate”. Rather than introducing a new tax band – a measure that would sit uneasily with his commitment to a simplified tax system – Osborne is more likely to seek to increase the personal allowance beyond the original target of £10,000.

A far greater problem than the loss of the 10p tax rate is the coalescing of Labour and the Liberal Democrats around a mansion tax. Of the three main parties, only the Tories now believe that a family in a three-bedroom house in Tower Hamlets should pay the same rate of property tax as an oligarch in a Kensington palace. Those voters who select what James O’Shaughnessy, David Cam­eron’s former director of policy, calls the “dreaded posh family in front of a mansion” when asked to choose the picture that best represents the Tories have had all their prejudices confirmed.

The irony is that it was Osborne – who is now leading the charge against a new property tax – who agreed to introduce two higher council tax bands on houses worth more than £1m ahead of last year’s Autumn Statement before being overruled by Cam­eron. It later emerged that the Tories had surreptitiously written to their wealthy donors soliciting funds to campaign against a “homes tax”, a fact that Miliband gleefully cites as proof that the Prime Minister “stands up for the wrong people”. The Labour leader intends to increase the Tories’ discomfort by using an opposition day debate to force a Commons vote on a mansion tax. In order to maximise the chances of support from Nick Clegg’s party, the motion is not expected to include a reference to the 10p tax rate.

As Miliband hoped, his appropriation of the measure has already forced the Lib Dems into even more aggressive differentiation. Clegg accuses his coalition partners of “turning a blind eye to the super-wealthy” and of defending the interests of “people in very large mansions”. For Labour, such interventions have a dual purpose; they retoxify the Conservative brand while reinforcing the impression of the Lib Dems as the helpless hostages of a Tory clique.

Ever since the Thatcher era, British politics has been governed by the belief that the left won the culture war and the right won the economic war. Yet increasingly it feels as if the reverse is now the case. The left is winning the debate on the need for greater financial regulation and taxation of the wealthy, while the right is winning the debate on the need for a new social conservatism to heal Britain’s “broken society”. In their opposition to a mansion tax, the Tories have positioned themselves on the wrong side of this divide. Until they do otherwise, that picture of the “dreaded posh family” will continue to define them.

Ed Miliband and Swedish Social Democratic leader Stefan Lofven talk after a visit at the Royal Institute of Technology in Stockholm, Sweden. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

This article first appeared in the 25 February 2013 issue of the New Statesman, The cheap food delusion

Photo: Getty
Show Hide image

Nicola Sturgeon is betting on Brexit becoming real before autumn 2018

Second independence referendum plans have been delayed but not ruled out.

Three months after announcing plans for a second independence referendum, and 19 days after losing a third of her Scottish National Party MPs, Scotland’s First Minister Nicola Sturgeon booted the prospect of a second independence referendum into the heather. 

In a statement at Holyrood, Sturgeon said she felt her responsibility as First Minister “is to build as much unity and consensus as possible” and that she had consulted “a broad spectrum of voices” on independence.

She said she had noted a “commonality” among the views of the majority, who were neither strongly pro or anti-independence, but “worry about the uncertainty of Brexit and worry about the clarity of what it means”. Some “just want a break from making political decisions”.

This, she said had led her to the conclusion that there should be a referendum reset. Nevertheless: "It remains my view and the position of this government that at the end of this Brexit process the Scottish people should have a choice about the future of our country." 

This "choice", she suggested, was likely to be in autumn 2018 – the same time floated by SNP insiders before the initial announcement was made. 

The Scottish Lib Dem leader Willie Rennie responded: “The First Minister wishes to call a referendum at a time of her choosing. So absolutely nothing has changed." In fact, there is significance in the fact Sturgeon will no longer be pursuing the legislative process needed for a second referendum. Unlike Theresa May, say, she has not committed herself to a seemingly irreversable process.

Sturgeon’s demand for a second independence referendum was said to be partly the result of pressure from the more indy-happy wing of the party, including former First Minister Alex Salmond. The First Minister herself, whose constituency is in the former Labour stronghold of Glasgow, has been more cautious, and is keenly aware that the party can lose if it appears to be taking the electorate for granted. 

In her speech, she pledged to “put our shoulder to the wheel” in Brexit talks, and improve education and the NHS. Yet she could have ruled out a referendum altogether, and she did not. 

Sturgeon has framed this as a “choice” that is reasonable, given the uncertainties of Brexit. Yet as many of Scotland’s new Labour MPs can testify, opposition to independence on the doorstep is just as likely to come from a desire to concentrate on public services and strengthening a local community as it is attachment to a more abstract union. The SNP has now been in power for 10 years, and the fact it suffered losses in the 2017 general election reflects the perception that it is the party not only for independence, but also the party of government.

For all her talk of remaining in the single market, Sturgeon will be aware that it will be the bread-and-butter consequences of Brexit, like rising prices, and money redirected towards Northern Ireland, that will resonate on the doorstep. She will also be aware that roughly a third of SNP voters opted for Brexit

The general election result suggests discontent over local or devolved issues is currently overriding constitutional matters, whether UK-wide or across the EU. Now Brexit talks with a Tory-DUP government have started, this may change. But if it does not, Sturgeon will be heading for a collision with voter choice in the autumn of 2018. 

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

0800 7318496