Labour and the Tories are both avoiding the tax debate we need

The repetitive and needlessly venomous exchanges over the 50p rate distract from the long-term question of how we should pay for the services that we value in an era of austerity.

Ed Balls’s confirmation that Labour would restore the 50p top rate of income tax has gone down badly with the small number of people who would be eligible to pay. It isn’t very popular with conservative commentators either. The two sets no doubt intersect on the venn diagram of people who think austerity is a much better idea when it affects someone else.

None of this is very surprising. The economic and political arguments are pretty much the same as they were when George Osborne axed the rate – and it was all but inevitable that Labour would pledge to restore it. The attack on a “Tory tax cut for millionaires” probes a serious weakness in the Conservative brand, but its effectiveness would be diminished by a queasy caveat to the effect that “we hate it but we wouldn’t reverse it.” So reverse it Labour will, if they get the chance.

One thing Labour has failed to do in the days since the announcement was made is put any pressure on the Tories and Lib Dems to talk about their own tax rises this parliament – the VAT hike leaps out as a broken Conservative pre-election promise and a regressive measure – and the near certainty that there is more to come after 2015.

Osborne insists he can balance the books without raising any more taxes, simply by stripping yet more cash out of the welfare budget instead. (And he is confident that voters are sufficiently hostile to benefit spending to make cuts in that direction an attractive proposition.) But most economists and policy wonks who have looked at the fiscal projections and scanned the post-election landscape think any incoming government will be raising taxes and cutting spending.

So really the Balls announcement ought to be an opportunity to discuss with a bit of candour how money should be raised. If, as the critics insist, the 50p rate is ineffective and counter-productive, what kind of taxes are legitimate and just?

None but the flattest and lowest possible, say the libertarians. But let’s suppose for the sake of argument that an incoming government isn’t rolling in surprisingly luxuriant revenues – that growth disappoints – yet still ministers want to provide universal healthcare, education, a police force, some military capability, investment in infrastructure and a basic guarantee that elderly people will not be abandoned to penury and starvation.

Those, after all, will be Labour and Tory manifesto commitments and they will have to be funded. Even if you accept the view that the optimum direction is always towards lower taxes, there is still a debate to be had about widening the tax base and winning consent for government to impose levies and spend on our collective behalf from time to time.

In my column in the magazine last week, I mentioned the intriguing example of the special “business rate supplement” that helps meet the costs of Crossrail. Those who set it up say the companies that stand to benefit from the new train service were more than happy to subsidise its construction. “A rare example of taxpayers asking to pay more taxes,” was how one architect of the scheme described it to me. Labour’s policy review team are looking closely at this kind of approach – allowing local authorities more fiscal freedom if the focus is on boosting local services and infrastructure.

In a very different corner of the policy field, Danny Finkelstein, Times columnist, Conservative peer, and casual advisor to the Chancellor, recently floated the idea of a dedicated NHS tax. The idea is that British voters will only be persuaded of the case for drastic reform of the health service when they are confronted with the reality of how much the current funding model costs them and how inexorably that burden will rise. (The Times article is behind a paywall, so here’s a free discussion of the same issue from Nick Pearce’s IPPR blog.)

The appearance of this notion under Lord Finkelstein’s byline all but guarantees that it will be under some level of consideration in the Treasury. What this and Labour’s local infrastructure thinking have in common is a recognition that traditional models of consent for tax rises have broken down.

Whitehall has always hated hypothecation – the pegging of specific revenue streams to particular services. But in a climate where politicians and officials are simply not trusted with public money, some new devices will be needed to reassure people, whether as private households or businesses, that it is worthwhile handing a portion of their earnings over to state agencies so they can effect good works.

The repetitive and needlessly venomous exchanges over the 50p rate have shown that British politicians like arguments about taxes that reinforce existing prejudices about their opponents – Labour as neo-Bolshevik confiscators of wealth; Tories as self-serving plutocrats defending their entrenched privileges. There are all sorts of questions to be asked about the kind of taxation that supports growth and enterprise, adequately and sustainably funds public services, is not too onerous and conforms to voters’ natural sense of fairness. Sadly, that isn’t the debate we are going to have in the run-up to the next general election. 

Ed Balls and George Osborne attend the State Opening of Parliament on May 8, 2013. Photograph: Getty Images.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

Photo: Getty
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In the fight against climate change, humanity has a choice of two futures

We must fight man-made climate change, says Patricia Scotland. 

So here we are at this fork in the road. On one path, the risk of a future of chaos. A new world map with miles and miles of stormy ocean where there were once islands and schools and playgrounds, businesses and life.

A globe with acre after acre of arid desert where there were once fertile mountains and valleys, green vegetation and food.

A path where our existence is defined by pandemics and migration crises, as the earth’s population tries to squeeze into the ever-reducing areas of habitable land.

In this reality, all the arguments about progress and advancement are consigned to the pages of our history, the only agenda item at international meetings is survival.

But the other fork is an alternative path. From the window of an airplane, with wings that exactly resemble a bird’s feathers, views of healthy mangrove as far as the eye can see, miles of luxurious, green canopy, interrupted by shimmering blue oceans.

Nature in all its glory and striking colours, thriving. And when it meets a city it doesn’t mind pausing for a while, because this metropolis is powered by geothermal energy, and the office buildings are made of carbon-eating concrete that behave like trees, and the mall is modelled after a termite mound. Every roof is lined with solar panels.

Two sides of the same coin. The first possibility a dystopian apocalyptic vision; the other a reality, already happening, which may just prevent and reverse the existential threat on this precious planet we call home. 

Last month, representatives of Commonwealth governments met with climate change experts, academics and businesses to launch an alternative pathway to addressing climate change, one that moves beyond adaptation, beyond mitigation, to actually reversing the human effects of climate change. 

It proposes to regenerate the environment by taking excess carbon and carbon dioxide (CO2) out of the atmosphere, where it is poisoning our planet, and putting it back in the soil where belongs.

This initiative, Regenerative Development to Reverse Climate Change, in collaboration with the Cloudburst Foundation, creates the potential for climate change to become an opportunity for innovation and sustainable, eco-friendly economic growth.

Strong support from some of the greatest environmental advocates, including Prince Charles, Mary Robinson and Anote Tong, and powerful presentations from some of the finest minds in the climate change arena, gave us the gift of possibility.

World-renowned experts like Paul Hawken, Thomas Goreau, Janine Benyus and Ben Haggard pointed out that these innovations are already happening. And it is quite simple really. For years man has watched nature and copied nature and nature has always led the way. How else did we make human flight happen if we did not copy God's own 'animal aircraft'?

We see it in other ways too, and the truth is that we already have amazing examples of biomimicry – technology that mimics nature. The eco-friendly Eastgate Centre in Zimbabwe is modelled after termite mounds. In China, the dry, barren plains of the Loess Plateau have been regenerated and restored to healthy green land; and we have similar examples of land regeneration in Rwanda.

What I am saying is that the genius of man, which created technologies that have huge benefits for human beings but detrimental effects on our environment, is the same genius we will employ to help us through mitigation and adaption, and ultimately to reverse climate change and stop global warming. But there is a fundamental problem. We have ecologists, scientists, environmentalists and academics coming up with these solutions working in silos.

So what the Commonwealth began to do last October, when we had our first climate change reversal workshop, is to bring them together. We invited 60 experts who are pioneering these approaches to climate change to Marlborough House. They explored how we can create an integrated plan on climate change reversal.

My goal is to be able to offer every Commonwealth country a package of multidisciplinary, multisectoral solutions to this multidimensional problem. Collaboration and political will are key, because we will need to weave the ideas into our curriculum, insert them in our building codes and business regulations and integrate them into our gender, agricultural and environmental policies.

But how will cash-strapped countries fund this? This is where initiatives like our Climate Finance Access Hub comes in. This programme gives countries the capacity to make successful applications for funding from the Green Fund and other climate change financing mechanisms.

We also have to listen to what the captains of industry are saying. At our meeting last month, Paul Polman, CEO of the mega-consumer goods company Unilever, stressed that when businesses consider investment they take into account sustainable development goals.

If there is no justice and peace, if there is hunger and destitution and if they are operating in cities which are not sustainable, on land that might be reclaimed by the sea or deteriorate into desert conditions, they are investing in a venture that will fail. So the regenerative approach does not have to come at the cost of economic growth. Actually, it will boost investment and development.

The Commonwealth has been at the forefront of the climate change discussion since the 1980s when it first became topical. Our milestones include the Langkawi Declaration in 1989 which commits us to protect the environment, and our leaders' summit in 2015, days before COP21, was instrumental in the landmark Paris Agreement on climate change. But the empirical evidence shows us that even at 1.5 degrees, islands will disappear into the ocean.

This November when governments convene at COP23, we will be posing the question: which pathway will you take? But this is not just a question for governments and organisations, it is a question for every single individual on this earth.

So what are we going to teach our children? More than 60 per cent of the 2.4 billion people in the Commonwealth are under the age of 30. How are we going to harness this exuberance and abundant talent and transform them into innovative solutions? How are we going to run our businesses and manage waste and energy in our homes? What path are you going to take? One that risks our future? Or one that is built on the principle that we can work with nature instead of against it to progress and develop?

Patricia Scotland is Secretary-General of the Commonwealth

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