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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Cabinet audit: what does the appointment of Andrea Leadsom as Environment Secretary mean for policy?

The political and policy-based implications of the new Secretary of State for Environment, Food and Rural Affairs.

A little over a week into Andrea Leadsom’s new role as Secretary of State for Environment, Food and Rural Affairs (Defra), and senior industry figures are already questioning her credentials. A growing list of campaigners have called for her resignation, and even the Cabinet Office implied that her department's responsibilities will be downgraded.

So far, so bad.

The appointment would appear to be something of a consolation prize, coming just days after Leadsom pulled out of the Conservative leadership race and allowed Theresa May to enter No 10 unopposed.

Yet while Leadsom may have been able to twist the truth on her CV in the City, no amount of tampering will improve the agriculture-related side to her record: one barely exists. In fact, recent statements made on the subject have only added to her reputation for vacuous opinion: “It would make so much more sense if those with the big fields do the sheep, and those with the hill farms do the butterflies,” she told an audience assembled for a referendum debate. No matter the livelihoods of thousands of the UK’s hilltop sheep farmers, then? No need for butterflies outside of national parks?

Normally such a lack of experience is unsurprising. The department has gained a reputation as something of a ministerial backwater; a useful place to send problematic colleagues for some sobering time-out.

But these are not normal times.

As Brexit negotiations unfold, Defra will be central to establishing new, domestic policies for UK food and farming; sectors worth around £108bn to the economy and responsible for employing one in eight of the population.

In this context, Leadsom’s appointment seems, at best, a misguided attempt to make the architects of Brexit either live up to their promises or be seen to fail in the attempt.

At worst, May might actually think she is a good fit for the job. Leadsom’s one, water-tight credential – her commitment to opposing restraints on industry – certainly has its upsides for a Prime Minister in need of an alternative to the EU’s Common Agricultural Policy (CAP); a policy responsible for around 40 per cent the entire EU budget.

Why not leave such a daunting task in the hands of someone with an instinct for “abolishing” subsidies  thus freeing up money to spend elsewhere?

As with most things to do with the EU, CAP has some major cons and some equally compelling pros. Take the fact that 80 per cent of CAP aid is paid out to the richest 25 per cent of farmers (most of whom are either landed gentry or vast, industrialised, mega-farmers). But then offset this against the provision of vital lifelines for some of the UK’s most conscientious, local and insecure of food producers.

The NFU told the New Statesman that there are many issues in need of urgent attention; from an improved Basic Payment Scheme, to guarantees for agri-environment funding, and a commitment to the 25-year TB eradication strategy. But that they also hope, above all, “that Mrs Leadsom will champion British food and farming. Our industry has a great story to tell”.

The construction of a new domestic agricultural policy is a once-in-a-generation opportunity for Britain to truly decide where its priorities for food and environment lie, as well as to which kind of farmers (as well as which countries) it wants to delegate their delivery.

In the context of so much uncertainty and such great opportunity, Leadsom has a tough job ahead of her. And no amount of “speaking as a mother” will change that.

India Bourke is the New Statesman's editorial assistant.