What Miliband's Sweden trip told us about Labour's tax policy

The Labour leader's commitment to "fairer", rather than "higher" taxes, suggests the party will not seek to significantly increase the overall tax burden.

While David Cameron visited India, Ed Miliband used the recess to make a pilgrimage to social democratic Europe. Accompanied by shadow foreign secretary Douglas Alexander and his chief consigliere Stewart Wood, Miliband held meetings with Denmark's Social Democrat prime minister Helle Thorning-Schmidt (who is married to Neil Kinnock's son, Stephen) and the leaders of Labour's Dutch and Swedish sister parties. 

Having stated that greater income equality should be an "explicit goal" of a Labour government, Miliband believes that the UK has much to learn from Sweden and Denmark, the most equal countries in the developed world. He has expressed particular admiration for Sweden's system of universal childcare, the policy credited with enabling its impressive levels of female employment. More than 80 per cent of Swedish mothers work, compared with just 67 per cent in the UK. In a nod to this achievement, Miliband tweeted during his visit: "Just arriving at Swedish Parliament building, passing two Swedish fathers with pushchairs. Scandinavian scene."

But one thing the Labour leader doesn't think we should import from the Nordic countries are their tax rates. In an interview with Bloomberg (which is worth reading in full), he said: 

There are some lessons you can learn, and some things that are different. They’ve always had a tradition of significantly higher tax and spending, which we don’t have in Britain and aren’t going to have in Britain. We’ve said that we want tax cuts for low and middle income families. That’s a sign of a fairer tax system; it’s not about higher taxes.

Miliband's words suggest that while a Labour government would increase taxes on the wealthy (as well as proposing a mansion tax, the party is considering reintroducing the 50p rate), it would not significantly increase the overall tax burden. Rather than traditional tax and spend, Miliband will look to predistributive measures such as the living wage, curbs on predatory energy and rail companies and universal childcare to combat inequality.

But the question he will need to answer is whether it is possible to fund the party's priorities -  jobs, housing, social care and childcare - without also raising taxes on middle and lower earners. If Labour goes into the 2015 election promising only to make the rich pay more, the Tories will be quick to dust down their "tax bombshell" posters. 

Ed Miliband and Swedish Social Democratic leader Stefan Lofven, visit the Royal Institute of Technology in Stockholm, Sweden. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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BHS is Theresa May’s big chance to reform capitalism – she’d better take it

Almost everyone is disgusted by the tale of BHS. 

Back in 2013, Theresa May gave a speech that might yet prove significant. In it, she declared: “Believing in free markets doesn’t mean we believe that anything goes.”

Capitalism wasn’t perfect, she continued: 

“Where it’s manifestly failing, where it’s losing public support, where it’s not helping to provide opportunity for all, we have to reform it.”

Three years on and just days into her premiership, May has the chance to be a reformist, thanks to one hell of an example of failing capitalism – BHS. 

The report from the Work and Pensions select committee was damning. Philip Green, the business tycoon, bought BHS and took more out than he put in. In a difficult environment, and without new investment, it began to bleed money. Green’s prize became a liability, and by 2014 he was desperate to get rid of it. He found a willing buyer, Paul Sutton, but the buyer had previously been convicted of fraud. So he sold it to Sutton’s former driver instead, for a quid. Yes, you read that right. He sold it to a crook’s driver for a quid.

This might all sound like a ludicrous but entertaining deal, if it wasn’t for the thousands of hapless BHS workers involved. One year later, the business collapsed, along with their job prospects. Not only that, but Green’s lack of attention to the pension fund meant their dreams of a comfortable retirement were now in jeopardy. 

The report called BHS “the unacceptable face of capitalism”. It concluded: 

"The truth is that a large proportion of those who have got rich or richer off the back of BHS are to blame. Sir Philip Green, Dominic Chappell and their respective directors, advisers and hangers-on are all culpable. 

“The tragedy is that those who have lost out are the ordinary employees and pensioners.”

May appears to agree. Her spokeswoman told journalists the PM would “look carefully” at policies to tackle “corporate irresponsibility”. 

She should take the opportunity.

Attempts to reshape capitalism are almost always blunted in practice. Corporations can make threats of their own. Think of Google’s sweetheart tax deals, banks’ excessive pay. Each time politicians tried to clamp down, there were threats of moving overseas. If the economy weakens in response to Brexit, the power to call the shots should tip more towards these companies. 

But this time, there will be few defenders of the BHS approach.

Firstly, the report's revelations about corporate governance damage many well-known brands, which are tarnished by association. Financial services firms will be just as keen as the public to avoid another BHS. Simon Walker, director general of the Institute of Directors, said that the circumstances of the collapse of BHS were “a blight on the reputation of British business”.

Secondly, the pensions issue will not go away. Neglected by Green until it was too late, the £571m hole in the BHS pension finances is extreme. But Tom McPhail from pensions firm Hargreaves Lansdown has warned there are thousands of other defined benefit schemes struggling with deficits. In the light of BHS, May has an opportunity to take an otherwise dusty issue – protections for workplace pensions - and place it top of the agenda. 

Thirdly, the BHS scandal is wreathed in the kind of opaque company structures loathed by voters on the left and right alike. The report found the Green family used private, offshore companies to direct the flow of money away from BHS, which made it in turn hard to investigate. The report stated: “These arrangements were designed to reduce tax bills. They have also had the effect of reducing levels of corporate transparency.”

BHS may have failed as a company, but its demise has succeeded in uniting the left and right. Trade unionists want more protection for workers; City boys are worried about their reputation; patriots mourn the death of a proud British company. May has a mandate to clean up capitalism - she should seize it.