Cameron hands Labour an attack line by hinting the 45p tax rate could be cut

The PM's loose talk on tax has distracted from his popular pledge to maintain the triple lock on the state pension.

David Cameron has started 2014 with his biggest spending pledge to date: to maintain the triple lock on the state pension for the entirety of the next parliament. This means that pensions will continue to rise in line with inflation, earnings, or 2.5%, whichever is highest. He tells the Sunday Times: "This is the first plank of the next general election manifesto. Pensions are protected. I think that is really important. In a civilised society ... knowing you’re going to have a decent state pension ... is, I think, a really powerful thing."

This is undoubtedly smart politics. Pensioners are the most likely age group to vote (76 per cent did in 2010 compared to 65 per cent of the total population) and the Tories have become the first party to pledge to maintain the triple lock beyond 2015. But Cameron's promise is competing for attention this morning with his suggestion that the top rate of tax, which was reduced from 50p to 45p last year, could be cut again. He comments: "It just seemed to me that if your top rate of tax is not raising the money that it should, and it’s holding back the competitiveness of the economy, then even if it’s politically unpopular to change it, you must do it. I’m trying to sweep away all the things that hold back the chance of Britain being a real success story in the 21st century. And you know, having a top rate of tax of 50p is just going to hold Britain back. And what we’ve seen since the change is actually the growth of tax revenues."

And adds: "I’m always interested in listening to the experts. Tax rates should be set to raise money, not to send messages. I’m interested in making sure that the rich in this country pay a lot of tax, which they do. They’re paying a bigger share ... than they were. If people can bring forward arguments about how to maximise the revenue from the top rate of tax, I’m always interested to read them."

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 recent spike in tax receipts was most likely due to the income shifted from 2012 to 2013 in order to benefit from the lower rate. As the IFS noted: "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 reason the 50p rate raised less than forecast, although £1bn is hardly a trivial sum). Cameron should also avoid confusing correlation with cause. If revenues rise this year, it will likely owe more to the return of growth than lower taxes.

But regardless of the policy implications, Cameron's hint that the rate could be cut again ("If people can bring forward arguments...I'm always interested to read them") is terrible politics. Every poll published on the subject has shown that the public opposed the decision to reduce the 50p rate (one put support for the higher rate at 68%), while 48% favour a 60p rate. By suggesting, nevertheless, that the highest earners could be awarded another tax cut, Cameron has gifted Labour an attack line. Shadow chief secretary to the Treasury Chris Leslie wasted no time in declaring that "While ordinary families are facing a cost-of-living crisis it seems David Cameron wants to give people earning over £150,000 yet another tax cut. Working people are on average £1,600 a year worse off since the Tories came to office. But once again this Prime Minister seems determined to be on the side of the privileged few."

This should have been a good news day for the Tories, with Cameron promising continued increases in the state pension for all pensioners (not just some). But the PM's loose talk on tax has allowed Labour to once again portray him as being on the side of the few, not the many.

Update: Cameron tried to recover some ground on The Andrew Marr Show by saying that if he had "money in the coffers", he would target tax cuts at "the lowest paid", but he still refused to rule out cutting the 45p rate. If he wants to avoid allowing Labour to claim that he's planning another "millionaire's tax cut" throughout the election campaign, he would be wise to do so.

David Cameron gives a press conference after an EU summit in Brussels on December 20, 2013. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Andy Burnham and Sadiq Khan are both slippery self-mythologisers – so why do we rate one more than the other?

Their obsessions with their childhoods have both become punchlines; but one of these jokes, it feels to me, is told with a lot more affection than the other.

Andy Burnham is a man whose policies and opinions seem to owe more to political expediency than they do to belief. He bangs on to the point of tedium about his own class, background and interests. As a result he’s widely seen as an unprincipled flip-flopper.

Sadiq Khan is a man whose policies and opinions seem to owe more to political expediency than they do to belief. He bangs on to the point of tedium about his own class, background and interests. As a result he’s the hugely popular mayor of London, the voice of those who’d be proud to think of themselves as the metropolitan liberal elite, and is even talked of as a possible future leader of the Labour party.

Oh, and also they were both born in 1970. So that’s a thing they have in common, too.

Why it is this approach to politics should have worked so much better for the mayor of London than the would-be mayor of Manchester is something I’ve been trying to work out for a while. There are definite parallels between Burnham’s attempts to present himself as a normal northern bloke who likes normal things like football, and Sadiq’s endless reminders that he’s a sarf London geezer whose dad drove a bus. They’ve both become punchlines; but one of these jokes, it feels to me, is told with a lot more affection than the other.

And yes, Burnham apparent tendency to switch sides, on everything from NHS privatisation to the 2015 welfare vote to the leadership of Jeremy Corbyn, has given him a reputation for slipperiness. But Sadiq’s core campaign pledge was to freeze London transport fares; everyone said it was nonsense, and true to form it was, and you’d be hard pressed to find an observer who thought this an atypical lapse on the mayor’s part. (Khan, too, has switched sides on the matter of Jeremy Corbyn.)

 And yet, he seems to get away with this, in a way that Burnham doesn’t. His low-level duplicity is factored in, and it’s hard to judge him for it because, well, it’s just what he’s like, isn’t it? For a long time, the Tory leadership’s line on London’s last mayor was “Boris is Boris”, meaning, look, we don’t trust him either, but what you gonna do? Well: Sadiq is Sadiq.

Even the names we refer to them by suggest that one of these two guys is viewed very differently from the other. I’ve instinctively slipped into referring to the mayor of London by his first name: he’s always Sadiq, not Khan, just as his predecessors were Boris and Ken. But, despite Eoin Clarke’s brief attempt to promote his 2015 leadership campaign with a twitter feed called “Labour Andy”, Burnham is still Burnham: formal, not familiar. 

I’ve a few theories to explain all this, though I’ve no idea which is correct. For a while I’ve assumed it’s about sincerity. When Sadiq Khan mentions his dad’s bus for the 257th time in a day, he does it with a wink to the audience, making a crack about the fact he won’t stop going on about it. That way, the message gets through to the punters at home who are only half listening, but the bored lobby hacks who’ve heard this routine two dozen times before feel they’re in the joke.

Burnham, it seems to me, lacks this lightness of touch: when he won’t stop banging on about the fact he grew up in the north, it feels uncomfortably like he means it. And to take yourself seriously in politics is sometimes to invite others to make jokes at your expense.

Then again, perhaps the problem is that Burnham isn’t quite sincere enough. Sadiq Khan genuinely is the son of a bus-driving immigrant: he may keep going on about it, but it is at least true. Burnham’s “just a northern lad” narrative is true, too, but excludes some crucial facts: that he went to Cambridge, and was working in Parliament aged 24. Perhaps that shouldn’t change how we interpret his story; but I fear, nonetheless, it does.

Maybe that’s not it, though: maybe I’m just another London media snob. Because Burnham did grow up at the disadvantaged end of the country, a region where, for too many people, chasing opportunities means leaving. The idea London is a city where the son of a bus driver can become mayor flatters our metropolitan self-image; the idea that a northerner who wants to build a career in politics has to head south at the earliest opportunity does the opposite. 

So if we roll our eyes when Burnham talks about the north, perhaps that reflects badly on us, not him: the opposite of northern chippiness is southern snobbery.

There’s one last possibility for why we may rate Sadiq Khan more highly than Andy Burnham: Sadiq Khan won. We can titter a little at the jokes and the fibs but he is, nonetheless, mayor of London. Andy Burnham is just the bloke who lost two Labour leadership campaigns.

At least – for now. In six weeks time, he’s highly likely to the first mayor of Greater Manchester. Slipperiness is not the worst quality in a mayor; and so much of the job will be about banging the drum for the city, and the region, that Burnham’s tendency to wear his northernness on his sleeve will be a positive boon.

Sadiq Khan’s stature has grown because the fact he became London’s mayor seems to say something, about the kind of city London is and the kind we want it to be. Perhaps, after May, Andy Burnham can do the same for the north – and the north can do the same for Andy Burnham.

Jonn Elledge edits the New Statesman's sister site CityMetric, and writes for the NS about subjects including politics, history and Daniel Hannan. You can find him on Twitter or Facebook.