Why Miliband’s tax move is good news for the Lib Dems

The Labour leader's speech has reminded voters of two distinctive and popular Lib Dem policies: increasing the personal allowance and introducing a mansion tax.

Attempting to predict the issues that are likely to feature in a future general election is as foolhardy as it is difficult. However great the plans of those competing, however well honed their message calendars, the one thing we all know for certain is that events come along like storms in the desert and change the political landscape before our eyes.

But we speculate anyway, and occasionally we get it right. Probably the surest prediction we can make about the issues likely to be at play in the 2015 general election is that tax policy will feature heavily. Ed Miliband’s speech yesterday makes that as close to a certainty as possible.
 
The official Liberal Democrat response to Miliband’s speech was dismissive of his overall proposals: the Liberal Democrats in government have reduced the income tax paid by those on the lowest incomes by more in three years than Labour did in thirteen.
 
And the analysis of the speech by the Institute for Fiscal Studies supported the party’s assertion that the Lib Dem policy of raising the threshold at which people begin to pay income tax is a less complex and more effective way of helping the low paid than re-introducing the 10p rate.
 
Yet despite criticising the content, Liberal Democrats will be secretly rather happy with the Labour leader’s speech, for two reasons.
 
First, it shifts the political debate to the area where the Lib Dems are at their strongest: tax policy. For whatever else the party has done in government, it is the implementation of a £10,000 tax-free allowance that is cutting through the fog and being recognised by voters as a distinctive achievement.
 
In the run-up to the next general election, Liberal Democrats will want to talk of little else. Raising the threshold further – to the level of the average earnings of those on the national minimum wage – is already party policy. The party reasons that the combined message of having delivered the £10,000 threshold and seeking to go further in the next parliament is a very strong one indeed.
 
The second reason Liberal Democrats will be pleased with the speech is Miliband’s embrace of a mansion tax. You might think that the party would be annoyed by Labour’s blatant theft of one of its key policies, but actually the reverse is true.
 
The mansion tax is embedded in the minds of the public as a Lib Dem policy. It is unlikely that a random conversion to the merits of the idea will convince voters that if they want a mansion tax they should vote Labour. So by adopting the policy Miliband’s main achievement is to remind voters of the mansion tax, and to increase its importance in the political debate over taxation. Why would Liberal Democrats not welcome such a boost for one of the party’s most distinctive policies?
 
Labour's adoption of the policy also helps when it comes to negotiations in the event of another hung parliament, particularly if (as looks distinctly possible) the arithmetic allows for an arrangement between the Liberal Democrats and either Labour or the Tories. Most party members will not welcome Miliband’s change of heart because it is more likely to lead to a Labour-Lib Dem government. Contrary to popular belief, only a small number of party members would actively prefer that option.
 
Most Liberal Democrats would prefer to enter into an arrangement with whichever party agrees to implement more Lib Dem policies. And just as Labour’s warmer feelings towards electoral reform strengthened the Lib Dem hand in 2010 sufficiently to force the Tories into agreeing a referendum on the alternative vote, so the party’s embrace of a mansion tax makes it more likely that the policy will be implemented if Liberal Democrats end up in government, be it with Labour or the Tories.
 
Whether Miliband’s speech does Labour any good in the long-term remains to be seen, but Liberal Democrats should welcome it: there is every chance it will help Clegg’s party even more.
 
Nick Thornsby is a Liberal Democrat member and activist. His own blog can be found here
Deputy Prime Minister Nick Clegg and Business Secretary Vince Cable during a visit to the Ricardo Engine Assembly plant on September 24, 2012 in Shoreham-by-Sea. Photograph: Getty Images.
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North Yorkshire has approved the UK’s first fracking tests in five years. What does this mean?

Is fracking the answer to the UK's energy future? Or a serious risk to the environment?

Shale gas operation has been approved in North Yorkshire, the first since a ban introduced after two minor earthquakes in 2011 were shown to be caused by fracking in the area. On Tuesday night, after two days of heated debate, North Yorkshire councillors finally granted an application to frack in the North York Moors National Park.

The vote by the Tory-dominated council was passed by seven votes to four, and sets an important precedent for the scores of other applications still awaiting decision across the country. It also gives a much-needed boost to David Cameron’s 2014 promise to “go all out for shale”. But with regional authorities pitted against local communities, and national government in dispute with global NGOs, what is the wider verdict on the industry?

What is fracking?

Fracking, or “hydraulic fracturing”, is the extraction of shale gas from deep underground. A mixture of water, sand and chemicals is pumped into the earth at such high pressure that it literally fractures the rocks and releases the gas trapped inside.

Opponents claim that the side effects include earthquakes, polluted ground water, and noise and traffic pollution. The image the industry would least like you to associate with the process is this clip of a man setting fire to a running tap, from the 2010 US documentary Gasland

Advocates dispute the above criticisms, and instead argue that shale gas extraction will create jobs, help the UK transition to a carbon-neutral world, reduce reliance on imports and boost tax revenues.

So do these claims stands up? Let’s take each in turn...

Will it create jobs? Yes, but mostly in the short-term.

Industry experts imply that job creation in the UK could reflect that seen in the US, while the medium-sized production company Cuadrilla claims that shale gas production would create 1,700 jobs in Lancashire alone.

But claims about employment may be exaggerated. A US study overseen by Penn State University showed that only one in seven of the jobs projected in an industry forecast actually materialised. In the UK, a Friends of the Earth report contends that the majority of jobs to be created by fracking in Lancashire would only be short-term – with under 200 surviving the initial construction burst.

Environmentalists, in contrast, point to evidence that green energy creates more jobs than similar-sized fossil fuel investments.  And it’s not just climate campaigners who don’t buy the employment promise. Trade union members also have their doubts. Ian Gallagher, Secretary of Blackburn and District Trade Unions Council, told Friends of the Earth that: “Investment in the areas identified by the Million Climate Jobs Campaign [...] is a far more certain way of addressing both climate change and economic growth than drilling for shale gas.”

Will it deliver cleaner energy? Not as completely as renewables would.

America’s “shale revolution” has been credited with reversing the country’s reliance on dirty coal and helping them lead the world in carbon-emissions reduction. Thanks to the relatively low carbon dioxide content of natural gas (emitting half the amount of coal to generate the same amount of electricity), fracking helped the US reduce its annual emissions of carbon dioxide by 556 million metric tons between 2007 and 2014. Banning it, advocates argue, would “immediately increase the use of coal”.

Yet a new report from the Royal Society for the Protection of Birds (previously known for its opposition to wind farm applications), has laid out a number of ways that the UK government can meet its target of 80 per cent emissions reduction by 2050 without necessarily introducing fracking and without harming the natural world. Renewable, home-produced, energy, they argue, could in theory cover the UK’s energy needs three times over. They’ve even included some handy maps:


Map of UK land available for renewable technologies. Source: RSPB’s 2050 Energy Vision.

Will it deliver secure energy? Yes, up to a point.

For energy to be “sustainable” it also has to be secure; it has to be available on demand and not threatened by international upheaval. Gas-fired “peaking” plants can be used to even-out input into the electricity grid when the sun doesn’t shine or the wind is not so blowy. The government thus claims that natural gas is an essential part of the UK’s future “energy mix”, which, if produced domestically through fracking, will also free us from reliance on imports tarnished by volatile Russian politics.

But, time is running out. Recent analysis by Carbon Brief suggests that we only have five years left of current CO2 emission levels before we blow the carbon budget and risk breaching the climate’s crucial 1.5°C tipping point. Whichever energy choices we make now need to starting brining down the carbon over-spend immediately.

Will it help stablise the wider economy? Yes, but not forever.

With so many “Yes, buts...” in the above list, you might wonder why the government is still pressing so hard for fracking’s expansion? Part of the answer may lie in their vested interest in supporting the wider industry.

Tax revenues from UK oil and gas generate a large portion of the government’s income. In 2013-14, the revenue from license fees, petroleum revenue tax, corporation tax and the supplementary charge accounted for nearly £5bn of UK exchequer receipts. The Treasury cannot afford to lose these, as evidenced in the last budget when George Osborne further subsidied North Sea oil operations through increased tax breaks.

The more that the Conservatives support the industry, the more they can tax it. In 2012 DECC said it wanted to “guarantee... every last economic drop of oil and gas is produced for the benefit of the UK”. This sentiment was repeated yesterday by energy minister Andrea Leadsom, when she welcomed the North Yorkshire decision and described fracking as a “fantastic opportunity”.

Dependence on finite domestic fuel reserves, however, is not a long-term economic solution. Not least because they will either run out or force us to exceed international emissions treaties: “Pensions already have enough stranded assets as they are,” says Danielle Pafford from 350.org.

Is it worth it? Most European countries have decided it’s not.

There is currently no commercial shale-gas drilling in Europe. Sustained protests against the industry in Romania, combined with poor exploration results, have already caused energy giant Chevron to pull out of the country. Total has also abandonned explorations in Denmark, Poland is being referred to the European Court of Justice for failing to adequately assess fracking’s impact, and, in Germany, brewers have launched special bottle-caps with the slogan “Nein! Zu Fracking” to warn against the threat to their water supply.

Back in the UK, the government's latest survey of public attitudes to fracking found that 44 per cent neither supported nor opposed the practice, but also that opinion is gradually shifting out of favour. If the government doesn't come up with arguments that hold water soon, it seems likely that the UK's fracking future could still be blasted apart.

India Bourke is the New Statesman's editorial assistant.