Tory MPs divided over tax cuts after Miliband's 10p tax pledge

Conservative MP Graham Brady demands the abolition of Air Passenger Duty but Robert Halfon tells the New Statesman it would be the wrong move.

After Ed Miliband's audacious pledge to reintroduce the 10p tax rate, funded by a mansion tax on houses worth more than £2m, George Osborne is under even greater pressure from Conservative MPs to play a "trump card" when he delivers the Budget on 20 March. There's frustration among the Tories that the 10p tax rate, a measure championed by a Conservative MP, Robert Halfon, was taken up by Labour before Halfon's own party. If he wants to avoid a backlash, the Chancellor now has no choice but to announce significant tax cuts when he steps up to the despatch box next month. 

In an article for today's Daily Telegraph, Graham Brady (profiled by Caroline earlier this year), the chairman of the powerful 1922 Committee of backbench Tory MPs, wastes no time in setting out hs Budget wishlist. While praising the Chancellor's cuts to corporation tax (which has been reduced from 28 per cent to 23 per cent and will fall again to 21 per cent next year), he urges him to "go further". 

Brady's principal demand is for Osborne to abolish Air Passenger Duty - "the highest aviation tax in the world" - which the Chancellor increased by eight per cent in last year's Budget. He points to a study by PricewaterhouseCoopers which found that scrapping the tax would deliver an immediate economic boost of 0.5 per cent of GDP. This, Brady pointedly notes, is "not to be sneezed at in these days of anaemic growth." 

But when I spoke to Robert Halfon earlier this week (undoubtedly now the most influential backbench MP), he told me that cutting Air Passenger Duty would be the wrong move. "In times like this, flying is a luxury, it's not something you have to do" he said. "It's [reducing Air Passenger Duty] not the best way to help low-earners".

Having criticised Labour's 10p tax proposal on the grounds that it would only mean an extra £34 a year for a family (once benefit withdrawal is taken into account), Halfon is still pushing for Osborne to adopt his policy in full: a reintroduced 10p rate on earnings between £9,440 and £12,000 (Miliband's proposal would only apply to the first £1,000 of earnings over the personal allowance).

But with Osborne having unambiguously ruled out the introduction of a "mansion tax" ("this party of home ownership will have no truck with it," he said in his Conservative conference speech), the question remains how the Chancellor would pay for a 10p rate. Halfon has proposed funding the measure by  ring-fencing the extra revenue from the 45p rate (on the assumption that a lower top rate of tax will benefit growth). But with growth likely to remain anaemic or non-existent, Osborne will have little room for manoeuvre, not least because he has already promised to raise the personal allowance to £10,000 by the end of this parliament. Whether or not Tory MPs secure the tax cuts they wish to see may yet depend on whether the Chancellor, a fiscal conservative to his core, is finally willing to tolerate a higher deficit. 

George Osborne is under pressure to deliver tax cuts in the Budget after Ed Miliband pledged to reintroduce the 10p income tax rate. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Winning Scottish independence will be even harder than before - but it may be the only choice

Independence campaigners will have to find answers on borders, currency and more. 

The Brexit mutiny has taken not just the UK economy and its relationship with Europe into uncharted waters. it has also imperilled the union between Scotland and England. From Sir John Major to the First Minister, both Unionists and Nationalists had warned of it. The outcome, though, has made this certain. The Leave vote in England and Wales contrasted with an overwhelming Remain vote north of the border.

That every region in Scotland voted to stay In was quite remarkable. Historically, fishing and industrial communities have blamed the European Union for their woes. That antagonism was probably reflected in lower turnout - an abstention rather than a rejection. 

The talk now is of a second referendum on independence. This is understandable given the current mood. Opinion polls in the Sunday Times and Sunday Post showed a Yes vote now at 52 per cent and 59 per cent respectively. Moreover, anecdotal evidence suggests even arch No vote campaigners, from JK Rowling to the Daily Record, are considering the option.

The First Minister was therefore correct to say that a second referendum is now “back on the table”. Her core supporters expects no less. However, as with the economy and Europe, the constitutional relationship between Scotland and England is now in uncharted seas. Potential support for independence may be higher, but the challenges are arguably bigger than before. The difficulties are practical, political and geographic.

Of course the Little Englanders likely to take the helm may choose a velvet divorce. However, given their desire for the return of the Glories of Britannia that’s improbable. They’re as likely to wish to see Caledonia depart, as cede Gibraltar to Spain, even though that territory voted even more overwhelmingly In.

Ticking the legal boxes

Practically, there’s the obstacle of obtaining a legal and binding referendum. The past vote was based on the Edinburgh Agreement and legislation in Westminster and Holyrood. The First Minister has indicated the democratic arguments of the rights of the Scots. However, that’s unlikely to hold much sway. A right-wing centralist Spanish government has been willing to face down demands for autonomy in Catalonia. Would the newly-emboldened Great Britain be any different?

There are no doubt ways in which democratic public support can be sought. The Scottish Government may win backing in Holyrood from the Greens. However, consent for such action would need to be obtained from the Presiding Officer and the Lord Advocate, both of whom have a key role in legislation. These office holders have changed since the first referendum, where they were both more sympathetic and the legal basis clearer. 

Getting the EU on side

The political hurdles are, also, greater this time than before. Previously the arguments were over how and when Scotland could join the EU, although all accepted ultimately she could remain or become a member. This time the demand is that Scotland should remain and the rest of the UK can depart. But will that be possible? The political earthquake that erupted south of the Border has set tectonic plates shifting, not just in the British isles but across the European continent. The fear that a Brexit would empower dark forces in the EU may come to pass. Will the EU that the UK is about to leave be there for an independent Scotland to join? We cannot know, whatever European Commission President Jean-Claude Juncker may be saying at the moment. The First Minister is right to start engaging with Europe directly. But events such as elections in France and the Netherlands are outwith her control. 

Moreover, currency was the Achilles heel in the last referendum, and hasn’t yet been addressed. George Osborne was adamant in his rejection of a currency union. The options this time round, whether a separate Scottish currency or joining the euro, have yet to be properly explored. A worsened financial situation in the 27 remaining EU members hampers the latter and the former remains politically problematic. 

The problem of borders

Geography is also an obstacle  that will be even harder to address now than before. Scotland can change its constitution, but it cannot alter its location on a shared island. In 2014, the independence argument was simply about changing the political union. Other unions, whether monarchy or social, would remain untouched. The island would remain seamless, without border posts. An independent Scotland, whether in or out of the EU, would almost certainly have to face these issues. That is a significant change from before, and the effect on public opinion unknown.

The risk that's worth it

Ultimately, the bar for a Yes vote may be higher, but the Scots may still be prepared to jump it. As with Ireland in 1920, facing any risk may be better than remaining in the British realm. Boris Johnson as Prime Minister would certainly encourage that. 

David Cameron's lack of sensitivity after the independence referendum fuelled the Scottish National Party surge. But perhaps this time, the new Government will be magnanimous towards Scotland and move to federalism. The Nordic Union offers an example to be explored. Left-wing commentators have called for a progressive alliance to remove the Tories and offer a multi-option referendum on Scotland’s constitution. But that is dependent on SNP and Labour being prepared to work together, and win the debate in England and Wales.

So, Indy Ref The Sequel is on the table. It won’t be the same as the first, and it will be more challenging. But, if there is no plausible alternative, Scots may consider it the only option.

Kenny MacAskill served as a Scottish National MSP between 2007 and 2016, and as Cabinet Secretary for Justice between 2007 and 2014.