Will anyone break the tax taboo?

The planned pace of cuts is unachievable. All parties need to talk about tax rises.

The new Resolution Foundation report on public spending (of which more on The Staggers later) is a reminder of the grim inheritance that awaits whichever party wins the 2015 election. Based on Osborne's current fiscal envelope, which Labour has said it will use as its "starting point",  the next government will have to increase the pace of cuts by 50% between 2016 and 2018 in order to meet the deficit target. Departmental spending will be reduced by an average of 3.8%, compared to 2.4% in 2010-15 and 2.7% in 2015-16. Should the ring-fences around health, international development and schools spending remain, some departments will have had their budgets more than halved by the end of the programme (which, based on recent form, is likely to be further extended to 2020), with a 64% cut to the Foreign Office, a 46% cut to the Home Office and a 36% cut to defence. 

Tasked with delivering a Tory majority in 2015, Osborne has pushed the bulk of austerity into the years after the election. But as both the Resolution Foundation and the IFS now argue, the forecast cuts are implausible. At some point, if they are to eliminate the structural deficit (one that exists regardless of the level of output), which stood at 4% last year, our politicians will need to talk about tax rises. Even to maintain the current level of cuts (as opposed to a more aggressive pace), the next Chancellor will have to raise taxes by £10bn.

But, as in the past, both Labour and the Tories appear determined not to broach this subject. Osborne perpetuates the myth that as much as 80% of the remaining consolidation can be achieved through cuts, while Labour talks only of possibly reinstating the 50p rate and introducing a mansion tax (partly in order to fund the reinstatement of a 10p rate), which wouldn't even raise half of the £10bn required. 

In practice, both parties will almost certainly raise taxes on all earners immediately after the election (as new governments so often do), but will they have the decency to warn us in advance? During the 2010 election, David Cameron repeatedly stated that the Tories had "absolutely no plans to raise VAT".

We have absolutely no plans to raise VAT. Our first Budget is all about recognising we need to get spending under control rather than putting up taxes.

That first Budget, of course, saw VAT increased from 17.5% to a record high of 20%, a move Osborne and Cameron had been planning all along (you don't raises taxes by £12.5bn on a whim). 

If this insult to democracy is not to be repeated, the parties must avoid colluding in the conspiracy of silence that so often affects tax. It should not be beyond our political class to engage the public in a reasonable debate about how best to raise new revenue. A land value tax; aligning income tax and capital gains; a higher top rate; a penny on income tax; all of these options should be discussed. But if recent history is any guide, don't count on our politicians doing so. 

David Cameron and Ed Miliband look on during the service to celebrate the 60th anniversary of the Coronation of Queen Elizabeth II at Westminster Abbey in London on June 4, 2013. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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Unite stewards urge members to back Owen Smith

In a letter to Unite members, the officials have called for a vote for the longshot candidate.

29 Unite officials have broken ranks and thrown their weight behind Owen Smith’s longshot bid for the Labour leadership in an open letter to their members.

The officials serve as stewards, conveners and negotiators in Britain’s aerospace and shipbuilding industries, and are believed in part to be driven by Jeremy Corbyn’s longstanding opposition to the nuclear deterrent and defence spending more generally.

In the letter to Unite members, who are believed to have been signed up in large numbers to vote in the Labour leadership race, the stewards highlight Smith’s support for extra funding in the NHS and his vision for an industrial strategy.

Corbyn was endorsed by Unite, Labour's largest affliated union and the largest trades union in the country, following votes by Unite's ruling executive committee and policy conference. 

Although few expect the intervention to have a decisive role in the Labour leadership, regarded as a formality for Corbyn, the opposition of Unite workers in these industries may prove significant in Len McCluskey’s bid to be re-elected as general secretary of Unite.

 

The full letter is below:

Britain needs a Labour Government to defend jobs, industry and skills and to promote strong trade unions. As convenors and shop stewards in the manufacturing, defence, aerospace and energy sectors we believe that Owen Smith is the best candidate to lead the Labour Party in opposition and in government.

Owen has made clear his support for the industries we work in. He has spelt out his vision for an industrial strategy which supports great British businesses: investing in infrastructure, research and development, skills and training. He has set out ways to back British industry with new procurement rules to protect jobs and contracts from being outsourced to the lowest bidder. He has demanded a seat at the table during the Brexit negotiations to defend trade union and workers’ rights. Defending manufacturing jobs threatened by Brexit must be at the forefront of the negotiations. He has called for the final deal to be put to the British people via a second referendum or at a general election.

But Owen has also talked about the issues which affect our families and our communities. Investing £60 billion extra over 5 years in the NHS funded through new taxes on the wealthiest. Building 300,000 new homes a year over 5 years, half of which should be social housing. Investing in Sure Start schemes by scrapping the charitable status of private schools. That’s why we are backing Owen.

The Labour Party is at a crossroads. We cannot ignore reality – we need to be radical but we also need to be credible – capable of winning the support of the British people. We need an effective Opposition and we need a Labour Government to put policies into practice that will defend our members’ and their families’ interests. That’s why we are backing Owen.

Steve Hibbert, Convenor Rolls Royce, Derby
Howard Turner, Senior Steward, Walter Frank & Sons Limited
Danny Coleman, Branch Secretary, GE Aviation, Wales
Karl Daly, Deputy Convenor, Rolls Royce, Derby
Nigel Stott, Convenor, BASSA, British Airways
John Brough, Works Convenor, Rolls Royce, Barnoldswick
John Bennett, Site Convenor, Babcock Marine, Devonport, Plymouth
Kevin Langford, Mechanical Convenor, Babcock, Devonport, Plymouth
John McAllister, Convenor, Vector Aerospace Helicopter Services
Garry Andrews, Works Convenor, Rolls Royce, Sunderland
Steve Froggatt, Deputy Convenor, Rolls Royce, Derby
Jim McGivern, Convenor, Rolls Royce, Derby
Alan Bird, Chairman & Senior Rep, Rolls Royce, Derby
Raymond Duguid, Convenor, Babcock, Rosyth
Steve Duke, Senior Staff Rep, Rolls Royce, Barnoldswick
Paul Welsh, Works Convenor, Brush Electrical Machines, Loughborough
Bob Holmes, Manual Convenor, BAE Systems, Warton, Lancs
Simon Hemmings, Staff Convenor, Rolls Royce, Derby
Mick Forbes, Works Convenor, GKN, Birmingham
Ian Bestwick, Chief Negotiator, Rolls Royce Submarines, Derby
Mark Barron, Senior Staff Rep, Pallion, Sunderland
Ian Hodgkison, Chief Negotiator, PCO, Rolls Royce
Joe O’Gorman, Convenor, BAE Systems, Maritime Services, Portsmouth
Azza Samms, Manual Workers Convenor, BAE Systems Submarines, Barrow
Dave Thompson, Staff Convenor, BAE Systems Submarines, Barrow
Tim Griffiths, Convenor, BAE Systems Submarines, Barrow
Paul Blake, Convenor, Princess Yachts, Plymouth
Steve Jones, Convenor, Rolls Royce, Bristol
Colin Gosling, Senior Rep, Siemens Traffic Solutions, Poole

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.