Don't fall for the Tories' spin over the 45p rate

Why the increase in tax revenues doesn't prove that the coalition was right to scrap the 50p rate.

The Treasury is busy spinning the latest income tax receipt figures as proof that it was right to abolish the 50p rate. Last month the new top rate of 45p raised £11.5bn, £1.3bn more than its predecessor. So, has Art Laffer (of the eponymous "curve") been vindicated? Do lower rates, as the right has long claimed, produce higher revenues? Not quite. The spike in tax receipts is most likely due to the income shifted from last year to this year in order to benefit from the lower rate. As the Institute for Fiscal Studies notes: "Receipts in April will have been boosted by high income individuals shifting income such as bonuses and special dividends from 2012–13 to 2013–14 in anticipation of the fall in the top rate of income tax from 50 per cent to 45 per cent". 

This, of course, is a trick the rich can only play once (unless the rate is reduced again), just as, in the opposite direction, they shifted £16bn into the previous tax year when the rate was still 40p (the real reason that the 50p rate raised less than forecast, although a £1bn isn't to be sniffed at). There was never a "normal" year of the 50p rate. This, of course, was precisely Osborne's intention. Having falsely claimed that the (anomalous) first year of the 50p rate proved that it was ineffective, he will now use the (anomalous) first year of the 45p rate to argue that he was right to scrap it. How much would the 50p rate have raised? We'll never know; Osborne cancelled the experiment at birth. 

The 45p rate may well raise more in the months ahead but we'll have no means of detaching this from any concurrent increase in growth. But don't expect that to stop Osborne declaring victory in the 2014 Budget.

George Osborne arrives to attend a press conference at the conclusion of the IMF UK mission. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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On the important issues, Louise Casey all too often has little to say

Far from moving the debate on, this new report on integration adds little to the report I commissioned in 2001. 

For 15 years, “numerous government reports on community cohesion and integration have not been implemented with enough force or consistency” concludes Louise Casey’s review of  integration.  The government’s lukewarm response suggests their effort will be as “diluted and muddled” as all the rest.

There’s a deeper reason why governments shy away from the measures that are needed. The report's wealth of data sets out a stark if sometimes contestable picture of a divided society.  But no amount of data can really bring the lives of our fellow citizens to life. As the Brexit vote underlined, this is now a nation divided by class, geography, education, wealth, opportunity and race. Those divisions colour the way we live our lives, the way we see problems in society, the relations we have with others, and our political choices. The report, like many before it, stops short of setting out that reality. It’s easier to pretend that most of us pretty much agree on most things; but just few people don’t agree and they must be the problem. Predictably, much of the early coverage has focussed on the Muslim community and new migrants. If only it were so easy.

According to Casey “in this country, we take poverty, social exclusion, social justice and social mobility seriously” and we do it “across political divides”. Apparently “creating a fair, just society where everyone can prosper and get on” is a cornerstone of British values. Yet for page after page the report chronicles the serial failure of this benign consensus to tackle educational under-performance, and economic and racial disadvantage. If we all agree, how come we haven't done anything about it?

These problems are not certainly easy to solve, but more lip service is paid to tackling them than effort. The practical material issues documented here need addressing, but punches are pulled when hard answers are needed. Given the dramatic impact of mass migration on cohesion, is integration possible while current rates of immigration persist? Can we find the political will to tackle poverty and disadvantage when those who might benefit from the effort are divided against each other by suspicion, race, geography and values? After all, rather than progressive policies producing a cohesive society, social unity is the precondition for the introduction of progressive policies.

We don't actually actually agree on what our “fundamental values” mean in practice. We can all sign up to democracy and the rule of law, but as soon as those are put into practice – see the court case on Article 50 – we are divided. When judges are popularly seen as “enemies of the people” and a vote in an elected parliament as a threat to democracy, in what sense are law and democracy fundamental?

Casey usefully highlights how treating homeless families equally, irrespective of ethnicity and length of residence can create the perception that minorities are being favoured over long standing residents. Our differing views on what is “just” and how “fairness” are defined can tear us apart. Is it fair to favour the newcomer over the indigenous? Is it just to put length of time on the waiting list above housing need? We often don't even acknowledge the legitimacy of other points of view, let alone try to find common ground.

The continual invocation of Britain and British values lends an air of unreality to the report.  Most people in England include British in their identity, but Englishness and English interests are of growing importance. In a worrying development, some areas of England  may be polarising between a white Englishness and an ethnic minority Britishness. Integration won't happen without a shared national story that combines a unifying national identity with the acceptance that we all have more than one identity that matters to us. Ignoring the reality of complex and multiple identities closes off one essential way forward.

None of this means that the criticism of some reactionary and occasionally dangerous ideas and practices in the Muslim community should be ignored and not confronted. But in a country where the established church opposes homosexual relationships and praise for Vladimir Putin's Russia is now mainstream politics it is hard to believe that all our problems can be reduced to the behaviour of a minority of a minority community.

John Denham was a Labour MP from 1992 to 2015, and a Secretary of State 2007 to 2010. He is Director of the Centre for English Identity and Politics at Winchester University