Miliband's 10p tax pledge is a political masterstroke

The Labour leader has distanced himself from one of Gordon Brown's biggest mistakes, demonstrated his commitment to redistribution and left the coalition playing catch-up.

It looks like Ed Miliband has been reading the New Statesman. Last week's NS leader urged the Labour leader to call for the return of the 10p tax rate (as demanded by Conservative MP Robert Halfon) and in his speech on the economy, Miliband has done just that. 

Having borrowed one smart idea from a Tory, Miliband has borrowed another from a Lib Dem (Vince Cable). The return of the 10p rate will be funded by the introduction of a "mansion tax" on houses worth more than £2m. 

The numbers will need to be scrutinised but the politics are perfect. The pledge distances Miliband from one of Gordon Brown's greatest mistakes, demonstrates his commitment to redistribution and splits the coalition. The Tories want a 10p tax rate but oppose a mansion tax; the Lib Dems want a mansion tax but oppose a 10p rate (preferring an even higher personal allowance of £12,500). 

Here's the key section from the speech: 

A One Nation Labour budget next month would lay the foundations for a recovery made by the many, not just a few at the top.

Let me tell you about one crucial choice we would make, which is different from this government.

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.

Moving Labour on from the past and putting Labour where it should always have been, on the side of working people.

The question now is how George Osborne will respond when he delivers the Budget on 20 March. David Cameron hinted at PMQs yesterday that the Chancellor would announce the return of the 10p tax rate but having ruled out the introduction of a mansion tax, he'll need to find another means of funding it. The Lib Dems, meanwhile, are sceptical of the measure, arguing that a income tax threshold will do more to benefit the poorest.

As Lib Dem minister David Laws argued yesterday: "It's [raising the personal allowance] much simpler than having a 10p rate. It’s far more attractive to say to people on low incomes you won't pay any income tax until you earn a sensible amount of money. We’re even talking about raising it further in the next Parliament so people on minimum wage don’t pay any tax at all."

But whatever deal the coalition hammers out, Miliband's political masterstroke means Osborne now has no choice but to play a "trump card" at the Budget. 

Labour leader Ed Miliband pledged to reintroduce the 10p tax rate abolished by Gordon Brown in his speech on the economy in Bedford. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Leader: Against neverendums

At present, we are experiencing a fetishisation of referendums. But we must remember that Britain is a representative democracy.

Imagine a Britain where the death penalty was restored, where immigration quotas were determined on ethnicity and where some communities were forcibly repatriated to countries that they never called home. This is not some dystopia led by a British Donald Trump. It is what the UK could have looked like had the proponents of direct democracy – referendums – had their way.

Britain is a representative democracy. We elect 650 MPs and we entrust them with the power to make and scrutinise legislation on our behalf. This simple method of central government (we also have devolved institutions) has done much to ensure our stability where more fragile democracies, or illiberal ones, have succumbed to disorder or fascism.

At present, we are experiencing a fetishisation of referendums: we argue this having supported the Scottish referendum in 2014, for which the SNP had an unequivocal mandate. Yet, broadly, referendums are not a uniquely democratic way to arrive at a decision of national moment but a crude majoritarian tool. The deliberative nature of a parliament, with its built-in checks and balances, safeguards it against blindness to the interests of minority groups and views and allows compromises to evolve. Referendums can too easily allow the dominant moral panic of the time to be translated into immediate action. Had they been called on the progressive social advances of the 20th century, we would now be a far less open and tolerant society.

Referendums can also undermine the basis of representative democracy. Our parliament works, on the whole, because we trust its supreme authority to make decisions. As one concedes that there are some issues that are only legitimately settled by a referendum, the question immediately arises: which ones? If the UK’s continued membership of the European Union falls into this category, why not the Budget? If the Alternative Vote does, why not the issue of military intervention in Iraq or Libya? Yet the ultimate threat to our form of democracy is not referendums but those who have instigated them. The EU referendum on 23 June was dreamed up by the Prime Minister for no better reason than that he was pressured by recalcitrant right-wingers in the Tory party, as well as the UK Independence Party and the press.

Referendums seldom settle difficult questions, as events in Scotland have demonstrated. There, a “once in a generation” vote turned out to be no such thing: rarely does a week pass without Nicola Sturgeon making vague threats about a “second” independence referendum. Moreover, Ukip’s Nigel Farage is already talking about the need for a second EU referendum before the first has even happened.

When confused voters say that they want an objective list of the pros and cons of Brexit before they can make up their minds, what they mean is that they want their representatives to regain the courage to make difficult decisions on their behalf. Britain needs a frank reminder that politics is complicated and its practitioners are often skilled and conscientious.

It would be a folly to leave the EU but it was a folly enough to call this referendum during a period of multiple crises in Europe. It is time to speak up for representative democracy.

The rise of the nativist right

Had 31,000 Austrians voted differently, Europe would now have its first far-right president since 1945. The narrow defeat of the Freedom Party’s Norbert Hofer is emblematic of the xenophobic nativism that has spread across the continent. Mr Hofer’s softly spoken, telegenic manner belied his extreme views. He has declared that “Islam has no place in Austria”, wears a blue cornflower (the historic symbol of pan-Germanism) and is an honorary member of the student fraternity Marko-Germania zu Pinkafeld, which rejects the “fiction of an ‘Austrian nation’”.

Yet far from being an outlier, Hofer has many allies. Marine Le Pen’s Front National, Frauke Petry of Alternative für Deutschland and Geert Wilders of the Dutch Party for Freedom all rallied to his cause. In Hungary, Poland and Finland, the far right holds office.

The rise of these atavistic forces is an indictment of Europe’s mainstream, most notably its becalmed centre-left. As in the 1930s, nationalists have skilfully exploited cultural and economic alienation. History provides ample warning of the consequences of allowing such extremists into power. It is a lesson that Europe should not be forced to learn again. 

This article first appeared in the 26 May 2016 issue of the New Statesman, The Brexit odd squad