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

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Recess confidential: Labour's liquid party

Sniffing out the best stories from Westminster, including Showsec, soames, and Smith-side splits.

If you are celebrating in a brewery, don’t ask Labour to provide the drinks. Because of the party’s continuing failure to secure a security contractor for its Liverpool conference, it is still uncertain whether the gathering will take place at all. Since boycotting G4S, the usual supplier, over its links with Israeli prisons, Labour has struggled to find an alternative. Of the five firms approached, only one – Showsec – offered its services. But the company’s non-union-recognition policy is inhibiting an agreement. The GMB, the firm’s antagonist, has threatened to picket the conference if Showsec is awarded the contract. In lieu of a breakthrough, sources suggest two alternatives: the police (at a cost of £59.65 per constable per hour), or the suspension of the G4S boycott. “We’ll soon find out which the Corbynites dislike the least,” an MP jested. Another feared that the Tories’ attack lines will write themselves: “How can Labour be trusted with national security if it can’t organise its own?”

Farewell, then, to Respect. The left-wing party founded in 2004 and joined by George Galloway after his expulsion from Labour has officially deregistered itself.

“We support Corbyn’s Labour Party,” the former MP explained, urging his 522,000 Facebook followers to sign up. “The Labour Party does not belong to one man,” replied Jess Phillips MP, who also pointed out in the same tweet that Respect had “massively failed”. Galloway, who won 1.4 per cent of the vote in this year’s London mayoral election, insists that he is not seeking to return to Labour. But he would surely be welcomed by Jeremy Corbyn’s director of communications, Seumas Milne, whom he once described as his “closest friend”. “We have spoken almost daily for 30 years,” Galloway boasted.

After Young Labour’s national committee voted to endorse Corbyn, its members were aggrieved to learn that they would not be permitted to promote his candidacy unless Owen Smith was given equal treatment. The leader’s supporters curse more “dirty tricks” from the Smith-sympathetic party machine.

Word reaches your mole of a Smith-side split between the ex-shadow cabinet ministers Lisa Nandy and Lucy Powell. The former is said to be encouraging the challenger’s left-wing platform, while the latter believes that he should make a more centrist pitch. If, as expected, Smith is beaten by Corbyn, it’s not only the divisions between the leader and his opponents that will be worth watching.

Nicholas Soames, the Tory grandee, has been slimming down – so much so, that he was congratulated by Tom Watson, Labour’s deputy leader, on his weight loss. “Soon I’ll be able to give you my old suits!” Soames told the similarly rotund Watson. 

Kevin Maguire is away

I'm a mole, innit.

This article first appeared in the 25 August 2016 issue of the New Statesman, Cameron: the legacy of a loser