Osborne's new dividing line: a 0% tax rate against a 10p tax rate

The Chancellor appears to rule out a 10p tax rate for the Budget and says raising the personal allowance is "a better policy".

Ed Miliband's pledge to reintroduce the 10p tax rate has left the Tories with a dilemma. Having previously hinted that they might adopt the measure, which was first proposed by a Conservative MP, Robert Halfon, do they seek to match Miliband's offer or do they reject it? 

It now looks as if George Osborne has settled on the latter option. In his interview on ITV's The Agenda last night, the Chancellor declared that the coalition had "a better policy" - "a zero per cent tax rate". He pointed out that the increase in the tax-free personal allowance from £6,475 in 2010 to £9,440 (from this April) had already compensated all of those who lost out from Gordon Brown's abolition of the 10p tax rate, adding: "We've taken a million people out of tax altogether so I would say a zero per cent tax rate is going to be a little bit more attractive at an election than a 10% tax rate and that's certainly been our priority."

Coming from the man who remains the Conservatives' chief election strategist, it was a significant statement. The Lib Dems have long made it clear that they will go into the next election promising to raise the personal allowance to £12,500, so that no one on the minimum wage pays any income tax. Osborne's words suggest that the Tories are now more likely to match this offer than are they to cut the starting rate.

It's not an approach that will please all Tory MPs. Halfon is fond of quoting former Conservative chancellor Nigel Lawson, who began his time at the Treasury by raising personal allowances but later reversed direction. He later explained: "I wished to create a large constituency in favour of income-tax reductions. The last thing I wanted to do was to reduce the size of that constituency by taking people out of tax altogether." But the imperative for the Tories to differentiate themselves from Labour now trumps this concern. 

With two years of the parliament remaining, the tax threshold is just £560 from the coalition's target of £10,000 after a larger-than-expected increase in the Autumn Statement. If Osborne chooses to pull a rabbit out of the hat on Budget day (as he usually does), one wonders if it will be to meet this pledge ahead of schedule. Having unambiguously rejected a mansion tax and now cast scorn on the 10p tax rate, the Chancellor has shown that he has no intention of dancing to Labour's tune. 

Chancellor George Osborne leaves 11 Downing Street on January 7, 2013 in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Is it true that a PR firm full of Blairites is orchestrating the Labour coup?

Portland Communications has been accused of conspiring against Jeremy Corbyn. It's not true, but it does reveal a worrying political imbalance in the lobbying industry.

The secret is out. The Canary – an alternative left wing media outlet – claims to have uncovered the story that the lobby missed. The website has discovered “the truth behind the Labour coup, when it really began and who manufactured it”.

Apparently, the political consultancy and PR firm Portland Communications is “orchestrating” the Labour plotting through its extensive network of Blairite lobbyists and its close links to top media folk. Just when we thought that Tom Watson and Angela Eagle might have something to do with it.

Many Canary readers, who tend to be Jeremy Corbyn supporters, have been lapping up and sharing the shock news. “Thank you for exposing this subterfuge,” said Susan Berry. “Most helpful piece of the week,” enthused Sarah Beuhler.

On Twitter, Mira Bar-Hillel went even further: “It is now clear that @jeremycorbyn must remove anybody associated with Portland PR, the Fabians and Lord Mandelson from his vicinity asap.”

The Canary's strange, yet popular, theory goes like this: Portland was set up by Tony Blair’s former deputy communications chief Tim Allan. On its books are a number of Labour types, many of whom dislike Corbyn and also have links to the Fabian Society. The PR firm also has “countless links to the media” and the BBC recently interviewed a Portland consultant. Err, that’s it.

The author of the piece, Steve Topple, concludes: “The Fabians have mobilised their assets in both the parliamentary Labour party, in the media and in the sphere of public relations, namely via Portland Communications – to inflict as much damage as possible on Corbyn.”

To be fair to Topple, he is right to detect that Portland has a few active Blairites on the payroll. But on that basis, the entire British lobbying industry might also be behind Labour’s coup.

Rival lobbying firm Bell Pottinger employs paid-up Blairites such as the former prime minister’s assistant political secretary Razi Rahman and his ex-special adviser Darren Murphy. Bell Pottinger also has former News of The World political editor Jamie Lyons.

Are Rahman and Murphy also telling docile Labour MPs what to do?  Is Lyon busy ensuring that his old mates in the lobby are paying attention to the Labour story, just in case they get sidetracked or don’t fancy writing about the official opposition imploding around them?

And what about Lodestone Communications, whose boss is a close pal of Tom Watson? Or Lexington Communications, which is run by a former aide of John Prescott? Or Insight Consulting Group, which is run by the man who managed Andy Burnham’s recent leadership campaign?

Having tracked down the assorted Blairites at Portland, Topple asserts: “It surely can be no coincidence that so many of the employees of this company are affiliated to both Labour and the Fabians.”

Indeed it is no coincidence – but not in the way that the author suggests. Since the mid-1990s, Labour lobbyists have tended to come from the pragmatic, Blairite ranks of the party. This is largely because Labour spent the 1980s ignoring business, and that only changed significantly when Blair arrived on the scene.

Whisper it quietly, but Portland also employ a few Tories. Why don’t they get a mention? Presumably they are also busy focusing on how to destroy Boris Johnson or to ensure that Stephen Crabb never gets anywhere near Downing Street.

What is certainly true is that Corbynites are incredibly hard to find in public affairs. As one experienced Labour lobbyist at another firm has told me: “I know of nobody in the industry  or indeed the real world – who is a Corbynite. All of my Labour-supporting colleagues would be horrified by the accusation!”

David Singleton is editor of Public Affairs News. He tweets @singersz.