Labour exposes Osborne's tax cut for bankers

New figures from the party show that 643 bankers earning more than £1m a year will receive an average of £54,000 from the cut in the 50p tax rate.

After a week dominated by welfare cuts, an area where public opinion favours the coalition, Labour is hoping to regain the political advantage tomorrow when the 50p tax rate is officially reduced to 45p. Polls have consistently shown that the public, including Conservative voters, are overwhelmingly opposed to the move and an increasing number of Tory MPs (such as Jesse Norman and Robert Halfon) recognise that the decision inflicted permanent damage on their party's brand. 

Labour has dubbed tomorrow "Tory Millionaires' Day" after calculating that the UK's 13,000 income millionaires will receive an average tax cut of £100,000 a year (nearly four times the median salary of £26,500). Now the party's number crunchers have produced some equally potent stats on the gains that the top earning bankers will make. Labour has calculated that 643 bankers, working in the UK's five major banks and earning more than £1m a year, will receive a combined tax cut worth at least £34.6m per year - an average of £53,775 per banker. Millionaire bankers in the state-backed RBS and Lloyds are set to get a tax cut of over £7.5m per year - an average of £63,686 each. In addition, the 40 highest paid senior bank executives will receive a tax cut worth almost £4m - an average of £99,694 each.

Chris Leslie, the shadow financial secretary to the Treasury said:

People on middle and low incomes, who are paying more in higher VAT and seeing their tax credits and child benefit cut, will be totally appalled at the size of this government's tax giveaway to highly paid banking executives.

While the average family will be £891 worse off this year because of tax and benefit changes since 2010, it cannot be right for David Cameron and George Osborne to give a huge tax cut to millionaires this weekend.

Forcing millions to pay more while millionaires pay less is the act of a government that is totally out of touch and consistently stands up for the wrong people. Bankers are getting a bonus from David Cameron and George Osborne, while Britain's families pay the price for their economic failure.

For Osborne, who was careful in the Budget to emphasise that the banks would not benefit from the reductions in corporation tax, the figures are a political headache. The Chancellor's consistent line is that the 50p rate was ineffective because the rich avoided it (in fact, as I explained here, it raised £1bn in its first year and would have gone on to raise more) but to most voters that sounds like an argument for clamping down on avoidance (as the coalition claims it is doing), not for cutting taxes for the highest earners. 

People walk past the Royal Bank of Scotland building in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Air pollution: 5 steps to vanquishing an invisible killer

A new report looks at the economics of air pollution. 

110, 150, 520... These chilling statistics are the number of deaths attributable to particulate air pollution for the cities of Southampton, Nottingham and Birmingham in 2010 respectively. Or how about 40,000 - that is the total number of UK deaths per year that are attributable the combined effects of particulate matter (PM2.5) and Nitrogen Oxides (NOx).

This situation sucks, to say the very least. But while there are no dramatic images to stir up action, these deaths are preventable and we know their cause. Road traffic is the worst culprit. Traffic is responsible for 80 per cent of NOx on high pollution roads, with diesel engines contributing the bulk of the problem.

Now a new report by ResPublica has compiled a list of ways that city councils around the UK can help. The report argues that: “The onus is on cities to create plans that can meet the health and economic challenge within a short time-frame, and identify what they need from national government to do so.”

This is a diplomatic way of saying that current government action on the subject does not go far enough – and that cities must help prod them into gear. That includes poking holes in the government’s proposed plans for new “Clean Air Zones”.

Here are just five of the ways the report suggests letting the light in and the pollution out:

1. Clean up the draft Clean Air Zones framework

Last October, the government set out its draft plans for new Clean Air Zones in the UK’s five most polluted cities, Birmingham, Derby, Leeds, Nottingham and Southampton (excluding London - where other plans are afoot). These zones will charge “polluting” vehicles to enter and can be implemented with varying levels of intensity, with three options that include cars and one that does not.

But the report argues that there is still too much potential for polluters to play dirty with the rules. Car-charging zones must be mandatory for all cities that breach the current EU standards, the report argues (not just the suggested five). Otherwise national operators who own fleets of vehicles could simply relocate outdated buses or taxis to places where they don’t have to pay.  

Different vehicles should fall under the same rules, the report added. Otherwise, taking your car rather than the bus could suddenly seem like the cost-saving option.

2. Vouchers to vouch-safe the project’s success

The government is exploring a scrappage scheme for diesel cars, to help get the worst and oldest polluting vehicles off the road. But as the report points out, blanket scrappage could simply put a whole load of new fossil-fuel cars on the road.

Instead, ResPublica suggests using the revenue from the Clean Air Zone charges, plus hiked vehicle registration fees, to create “Pollution Reduction Vouchers”.

Low-income households with older cars, that would be liable to charging, could then use the vouchers to help secure alternative transport, buy a new and compliant car, or retrofit their existing vehicle with new technology.

3. Extend Vehicle Excise Duty

Vehicle Excise Duty is currently only tiered by how much CO2 pollution a car creates for the first year. After that it becomes a flat rate for all cars under £40,000. The report suggests changing this so that the most polluting vehicles for CO2, NOx and PM2.5 continue to pay higher rates throughout their life span.

For ClientEarth CEO James Thornton, changes to vehicle excise duty are key to moving people onto cleaner modes of transport: “We need a network of clean air zones to keep the most polluting diesel vehicles from the most polluted parts of our towns and cities and incentives such as a targeted scrappage scheme and changes to vehicle excise duty to move people onto cleaner modes of transport.”

4. Repurposed car parks

You would think city bosses would want less cars in the centre of town. But while less cars is good news for oxygen-breathers, it is bad news for city budgets reliant on parking charges. But using car parks to tap into new revenue from property development and joint ventures could help cities reverse this thinking.

5. Prioritise public awareness

Charge zones can be understandably unpopular. In 2008, a referendum in Manchester defeated the idea of congestion charging. So a big effort is needed to raise public awareness of the health crisis our roads have caused. Metro mayors should outline pollution plans in their manifestos, the report suggests. And cities can take advantage of their existing assets. For example in London there are plans to use electronics in the Underground to update travellers on the air pollution levels.

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Change is already in the air. Southampton has used money from the Local Sustainable Travel Fund to run a successful messaging campaign. And in 2011 Nottingham City Council became the first city to implement a Workplace Parking levy – a scheme which has raised £35.3m to help extend its tram system, upgrade the station and purchase electric buses.

But many more “air necessities” are needed before we can forget about pollution’s worry and its strife.  

 

India Bourke is an environment writer and editorial assistant at the New Statesman.