The problem with Clegg's tax cut plan: it does nothing to help the poorest

The lowest-paid five million workers will not benefit from an increase in the income tax threshold to £10,500. Cutting VAT or National Insurance would be more progressive.

When the Lib Dems' plan to raise the income tax threshold to £10,000 by 2015 was discussed in the televised leaders' debates, David Cameron told Nick Clegg: "I would love to take everyone out of their first £10,000 of income tax, Nick...We cannot afford it." The PM has rather changed his tune since then. He now leads a government that will meet that pledge in April 2014, a year earlier than promised, and a party that lists its greatest achievement as "a tax cut for 24 million hardworking people".

With the £10,000 threshold due to take effect when the new tax year begins, there is room for the coalition to go further in the two Budgets that remain before May 2015. Today, in an attempt to reclaim ownership of the policy, Clegg has called on George Osborne to deliver a pre-election tax cut by increasing the allowance to £10,500 and delivering a "workers' bonus" (note the smart framing).

Interviewed on The Andrew Marr Show this morning, he boasted that his plan would mean "an extra £100 in everybody's pocket". Except, of course, it wouldn't. Raising the personal allowance will do nothing for the lowest-paid five million workers, all of whom earn less than £10,000, or the unemployed, the disabled and the retired. As the IFS has shown, those in the second-richest decile gain the most in cash terms from the policy (mainly due to the greater number of dual-earning households), followed by the richest tenth, who gain marginally less due to the gradual removal of the personal allowance after £100,000 (a brilliant piece of stealth redistribution by Alistair Darling). As a percentage of income, it is middle-earners who gain the most, with those at the bottom gaining the least.

Marr failed to challenge Clegg on this point, but Labour and other parties should. Progressive alternatives to raising the income tax threshold include increasing the National Insurance threshold, which currently stands at £7,748, or cutting VAT, which stands at a record 20 per cent and hits the poorest hardest. These policies might not be as politically attractive as a cut in income tax, but they will do more to get money where it is most needed.

Nick Clegg speaks at the Liberal Democrat conference in Glasgow earlier this year. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Labour's establishment suspects a Momentum conspiracy - they're right

Bernie Sanders-style organisers are determined to rewire the party's machine.  

If you wanted to understand the basic dynamics of this year’s Labour leadership contest, Brighton and Hove District Labour Party is a good microcosm. On Saturday 9 July, a day before Angela Eagle was to announce her leadership bid, hundreds of members flooded into its AGM. Despite the room having a capacity of over 250, the meeting had to be held in three batches, with members forming an orderly queue. The result of the massive turnout was clear in political terms – pro-Corbyn candidates won every position on the local executive committee. 

Many in the room hailed the turnout and the result. But others claimed that some in the crowd had engaged in abuse and harassment.The national party decided that, rather than first investigate individuals, it would suspend Brighton and Hove. Add this to the national ban on local meetings and events during the leadership election, and it is easy to see why Labour seems to have an uneasy relationship with mass politics. To put it a less neutral way, the party machine is in a state of open warfare against Corbyn and his supporters.

Brighton and Hove illustrates how local activists have continued to organise – in an even more innovative and effective way than before. On Thursday 21 July, the week following the CLP’s suspension, the local Momentum group organised a mass meeting. More than 200 people showed up, with the mood defiant and pumped up.  Rather than listen to speeches, the room then became a road test for a new "campaign meetup", a more modestly titled version of the "barnstorms" used by the Bernie Sanders campaign. Activists broke up into small groups to discuss the strategy of the campaign and then even smaller groups to organise action on a very local level. By the end of the night, 20 phonebanking sessions had been planned at a branch level over the following week. 

In the past, organising inside the Labour Party was seen as a slightly cloak and dagger affair. When the Labour Party bureaucracy expelled leftwing activists in past decades, many on went further underground, organising in semi-secrecy. Now, Momentum is doing the exact opposite. 

The emphasis of the Corbyn campaign is on making its strategy, volunteer hubs and events listings as open and accessible as possible. Interactive maps will allow local activists to advertise hundreds of events, and then contact people in their area. When they gather to phonebank in they will be using a custom-built web app which will enable tens of thousands of callers to ring hundreds of thousands of numbers, from wherever they are.

As Momentum has learned to its cost, there is a trade-off between a campaign’s openness and its ability to stage manage events. But in the new politics of the Labour party, in which both the numbers of interested people and the capacity to connect with them directly are increasing exponentially, there is simply no contest. In order to win the next general election, Labour will have to master these tactics on a much bigger scale. The leadership election is the road test. 

Even many moderates seem to accept that the days of simply triangulating towards the centre and getting cozy with the Murdoch press are over. Labour needs to reach people and communities directly with an ambitious digital strategy and an army of self-organising activists. It is this kind of mass politics that delivered a "no" vote in Greece’s referendum on the terms of the Eurozone bailout last summer – defying pretty much the whole of the media, business and political establishment. 

The problem for Corbyn's challenger, Owen Smith, is that many of his backers have an open problem with this type of mass politics. Rather than investigate allegations of abuse, they have supported the suspension of CLPs. Rather than seeing the heightened emotions that come with mass mobilisations as side-effects which needs to be controlled, they have sought to joins unconnected acts of harassment, in order to smear Jeremy Corbyn. The MP Ben Bradshaw has even seemed to accuse Momentum of organising a conspiracy to physically attack Labour MPs.

The real conspiracy is much bigger than that. Hundreds of thousands of people are arriving, enthusiastic and determined, into the Labour party. These people, and their ability to convince the communities of which they are a part, threaten Britain’s political equilibrium, both the Conservatives and the Labour establishment. When the greatest hope for Labour becomes your greatest nightmare, you have good call to feel alarmed.