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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Private renter poverty has doubled in a decade - so where's Labour?

The Joseph Rowntree Foundation named housing market failures as driving poverty. 

Labour’s economic policy task is enormous. It must find a coherent argument that addresses Brexit, the “left behinds”, and a nervous business community. But there is one policy area that should be an open goal – private renting. 

The number of private renters in poverty has doubled over the last decade, according to a new report from the Joseph Rowntree Foundation. Those most likely to fall into poverty are working families – there were 2.8m of these people in 2014-15, compared to 1m a decade earlier.

“Failures in the housing market are a significant driver of poverty,” the report noted, after finding more than 70 per cent of private renters in poverty pay at least a third of their income in rent.

This is particularly the case if you consider the knock-on effect - housing benefit. This benefit was frozen by George Osborne, meaning that by 2015 Shelter calculated rates had fallen behind actual rents in nearly 70 per cent of England. For families out of work, of course, housing benefit is also included in the benefit cap. 

Private renter poverty is easily characterised as an inner-city problem – the kind cherished by the “metropolitan elite”. But in fact, across Great Britain as a whole, roughly one in ten children under 19 lives in a family that is privately renting and claiming housing benefit. The highest percentage was in Blackpool, followed by the Essex coastal area of Tendring, followed by London boroughs. Private renting is a trend that affects both the Remain strongholds and the Leave coastal towns.

So far, Labour has been relatively quiet on private renting. During the summer’s leadership campaign, Jeremy Corbyn promised to introduce “rent controls, secure tenancies and a charter of private tenants’ rights” (a promise he repeated as part of a longer speech in November). But this is hardly a blockbuster campaign. 

And the challenges are great. A convincing renting policy must explain how Labour would deal with a reactionary letting market industry (including pensioner voters), whether renting should be a step to buying, or an end in itself, and how new council and social housing would be allocated.

Labour could also, though, tie a rent campaign into other trends - the growing army of self-employed that find it hard to prove their wages to a landlord or mortgage lender, the working families on frozen benefits, and the employers that find their employees priced out of the local area. And pissed-off tenants are not hard to find. 

If Labour doesn’t move soon on an issue that should be its natural home, the government may steal the keys. In the Autumn Statement, Philip Hammond helped himself to Ed Miliband’s 2015 promise to ban letting agent fees. The government has also set up a working group with members of the private renting industry. (Yes, the government may also be selling off social housing under Right to Buy, but if you never had the option of social housing anyway, this may pass you by.)

Fixing the housing market takes imagination and a steeliness to take on entrenched interests. But if Labour does come up with a solution, it could touch the lives of voters, both Leave and Remain. 

 

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