Miliband calls it right: tax income less and wealth more

As the NS has long argued, Labour should fund tax cuts for low and middle earners by finding new ways of taxing static assets, such as mansions and land.

It was a good speech from Ed Miliband today. He’s clearly been reading the New Statesman, which endorsed his bid for the leadership in 2010, just one of the many things we’ve got right over recent years – such as our forecast long ago that premature fiscal consolidation would result in a double dip recession, predicting a hung parliament (when no one else did) and calling for UK withdrawal from Afghanistan and talks with Taliban (now a mainstream position).

We’ve consistently argued that Labour should seek to reduce the tax burden for low and middle income earners and, because capital is so mobile and the very rich are so adept at avoiding income tax, find new ways of taxing unearned income and static assets, such as mansions and land. This is not a left/right issue: Vince Cable, Martin Wolf, of the Financial Times, and Tim Montgomerie, of the excellent ConservativeHome website, are all in favour of the introduction of new wealth taxes.

The UK needs a more resilient tax base and Labour, if it is to have any chance of winning again, must abandon unreconstructed statism and its old, failed tax and transfer redistributive model (we consider National Insurance to be a form of income tax, and Gordon Brown certainly used it as such with his devious manoeuvres). That’s why we support greater emphasis on “predistribution” (awful word but good concept). 

In last week’s magazine we supported, as George says, the admirable Conservative MP for Harlow (my old home town in Essex) Robert Halfon’s call for the restoration of the 10p tax band for earnings between the personal allowance, which will rise to £9,440 in April, and £12,000, a measure worth £256 to basic-rate taxpayers. Now Ed Miliband is saying that Labour would reintroduce the 10p rate. That is smart politics, and just the kind of distinctive policy it will need as it seeks to remake itself as the party of social justice, entrepreneurial initiative and the competent state in the run-up to the 2015 election. Above all, Labour needs to show that it has learned the lessons of the Blair/Brown years, when asset bubbles were allowed to inflate dangerously, the party became carless and arrogant in power and far too nonchalant about rising inequality. Game on.   

The 12-bedroom mansion in Kensington Palace Gardens bought by steel magnate Lakshmi Mittal for $128.3m in 2004. Photograph: Getty Images.

Jason Cowley is editor of the New Statesman. He has been the editor of Granta, a senior editor at the Observer and a staff writer at the Times.

GETTY
Show Hide image

Cabinet audit: what does the appointment of Andrea Leadsom as Environment Secretary mean for policy?

The political and policy-based implications of the new Secretary of State for Environment, Food and Rural Affairs.

A little over a week into Andrea Leadsom’s new role as Secretary of State for Environment, Food and Rural Affairs (Defra), and senior industry figures are already questioning her credentials. A growing list of campaigners have called for her resignation, and even the Cabinet Office implied that her department's responsibilities will be downgraded.

So far, so bad.

The appointment would appear to be something of a consolation prize, coming just days after Leadsom pulled out of the Conservative leadership race and allowed Theresa May to enter No 10 unopposed.

Yet while Leadsom may have been able to twist the truth on her CV in the City, no amount of tampering will improve the agriculture-related side to her record: one barely exists. In fact, recent statements made on the subject have only added to her reputation for vacuous opinion: “It would make so much more sense if those with the big fields do the sheep, and those with the hill farms do the butterflies,” she told an audience assembled for a referendum debate. No matter the livelihoods of thousands of the UK’s hilltop sheep farmers, then? No need for butterflies outside of national parks?

Normally such a lack of experience is unsurprising. The department has gained a reputation as something of a ministerial backwater; a useful place to send problematic colleagues for some sobering time-out.

But these are not normal times.

As Brexit negotiations unfold, Defra will be central to establishing new, domestic policies for UK food and farming; sectors worth around £108bn to the economy and responsible for employing one in eight of the population.

In this context, Leadsom’s appointment seems, at best, a misguided attempt to make the architects of Brexit either live up to their promises or be seen to fail in the attempt.

At worst, May might actually think she is a good fit for the job. Leadsom’s one, water-tight credential – her commitment to opposing restraints on industry – certainly has its upsides for a Prime Minister in need of an alternative to the EU’s Common Agricultural Policy (CAP); a policy responsible for around 40 per cent the entire EU budget.

Why not leave such a daunting task in the hands of someone with an instinct for “abolishing” subsidies  thus freeing up money to spend elsewhere?

As with most things to do with the EU, CAP has some major cons and some equally compelling pros. Take the fact that 80 per cent of CAP aid is paid out to the richest 25 per cent of farmers (most of whom are either landed gentry or vast, industrialised, mega-farmers). But then offset this against the provision of vital lifelines for some of the UK’s most conscientious, local and insecure of food producers.

The NFU told the New Statesman that there are many issues in need of urgent attention; from an improved Basic Payment Scheme, to guarantees for agri-environment funding, and a commitment to the 25-year TB eradication strategy. But that they also hope, above all, “that Mrs Leadsom will champion British food and farming. Our industry has a great story to tell”.

The construction of a new domestic agricultural policy is a once-in-a-generation opportunity for Britain to truly decide where its priorities for food and environment lie, as well as to which kind of farmers (as well as which countries) it wants to delegate their delivery.

In the context of so much uncertainty and such great opportunity, Leadsom has a tough job ahead of her. And no amount of “speaking as a mother” will change that.

India Bourke is the New Statesman's editorial assistant.