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.

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Everyone's forgotten the one issue that united the Labour party

There was a time when Ed Miliband spoke at Momentum rallies.

To label the row over the EU at Thursday’s Labour leadership hustings "fireworks" would be to endow it with more beauty than it deserves. Owen Smith’s dogged condemnation of John McDonnell’s absence from a Remain rally – only for Corbyn to point out that his absence was for medical reasons – ought to go down as a cringing new low point in the campaign. 

Not so long ago, we were all friends. In the course of the EU referendum, almost all of the protagonists in the current debacle spoke alongside each other and praised one another’s efforts. At a local level, party activists of all stripes joined forces. Two days before polling day, Momentum activists helped organise an impromptu rally. Ed Miliband was the headline speaker, and was cheered on. 

If you take the simple version of the debate, Labour’s schism on the EU appears as an aberration of the usual dynamics of left and right in the party. Labour's left is supposedly cheering a position which avoids advocating what it believes in (Remain), because it would lose votes. Meanwhile, the right claims to be dying in a ditch for its principles - no matter what the consequences for Labour’s support in Leave-voting heartlands.

Smith wants to oppose Brexit, even after the vote, on the basis of using every available procedural mechanism. He would whip MPs against the invocation of Article 50, refuse to implement it in government, and run on a manifesto of staying in the EU. For the die-hard Europhiles on the left – and I count myself among these, having run the Another Europe is Possible campaign during the referendum – there ought to be no contest as to who to support. On a result that is so damaging to people’s lives and so rooted in prejudice, how could we ever accept that there is such a thing as a "final word"? 

And yet, on the basic principles that lie behind a progressive version of EU membership, such as freedom of movement, Smith seems to contradict himself. Right at the outset of the Labour leadership, Smith took to Newsnight to express his view – typical of many politicians moulded in the era of New Labour – that Labour needed to “listen” to the views Leave voters by simply adopting them, regardless of whether or not they were right. There were, he said, “too many” immigrants in some parts of the country. 

Unlike Smith, Corbyn has not made his post-Brexit policy a headline feature of the campaign, and it is less widely understood. But it is clear, via the five "red lines" outlined by John McDonnell at the end of June:

  1. full access to the single market
  2. membership of the European investment bank
  3. access to trading rights for financial services sector
  4. full residency rights for all EU nationals in the UK and all UK nationals in the EU, and
  5. the enshrinement of EU protections for workers. 

Without these five conditions being met, Labour would presumably not support the invocation of Article 50. So if, as seems likely, a Conservative government would never meet these five conditions, would there be any real difference in how a Corbyn leadership would handle the situation? 

The fight over the legacy of the referendum is theatrical at times. The mutual mistrust last week played out on the stage in front of a mass televised audience. Some Corbyn supporters jeered Smith as he made the case for another referendum. Smith accused Corbyn of not even voting for Remain, and wouldn’t let it go. But, deep down, the division is really about a difference of emphasis. 

It speaks to a deeper truth about the future of Britain in Europe. During the referendum, the establishment case for Remain floundered because it refused to make the case that unemployment and declining public services were the result of austerity, not immigrants. Being spearheaded by Conservatives, it couldn’t. It fell to the left to offer the ideological counter attack that was needed – and we failed to reach enough people. 

As a result, what we got was a popular mandate for petty racism and a potentially long-term shift to the right in British politics, endangering a whole raft of workplace and legal protections along the way. Now that it has happened, anyone who really hopes to overcome either Brexit, or the meaning of Brexit, has to address the core attitudes and debates at their root. Then as now, it is only clear left-wing ideas – free from any attempt to triangulate towards anti-migrant sentiment– that can have any hope of success. 

The real dividing lines in Labour are not about the EU. If they were, the Eurosceptic Frank Field would not be backing Smith. For all that it may be convenient to deny it, Europe was once, briefly, the issue that united the Labour Party. One day, the issues at stake in the referendum may do so again – but only if Labour consolidates itself around a strategy for convincing people of ideas, rather than simply reaching for procedural levers.