Nick Clegg speaks at his party's spring conference in York earlier this month. Photograph: Getty Images.
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Lib Dems revolt over Clegg's refusal to cut taxes for the poorest

Lord Oakeshott and the liberal Centre Forum are demanding a cut in the National Insurance threshold, rather than another cut in income tax.

There is no coalition policy of which Nick Clegg is prouder than the increase in the personal tax allowance. Having achieved the original target of £10,000 (from a starting level of £6,475 in 2010/11) a year earlier than expected, Clegg has been pushing George Osborne to go further - and will get his wish in the Budget tomorrow. The Chancellor is likely to announce that the tax threshold will rise to £10,500 next year and perhaps even to £10,750 if he's feeling generous. Given the Lib Dems' limited success in government (no AV, no House of Lords reform, no mansion tax), Clegg is understandably keen to claim credit for a policy that voters overwhelmingly support and that David Cameron rejected as unaffordable during the first 2010 leaders' debate ("I would love to take everyone out of their first £10,000 of income tax, Nick. It's a beautiful idea, it's a lovely idea - we cannot afford it"). For Clegg, the increase due to be announced in the Budget is a step towards the Lib Dems' new target of a £12,500 tax allowance by the end of the next parliament. 

But not all in his party share his enthusiasm for continually hiking the tax threshold. By definition, as the policy continues, it becomes increasingly less progressive. The five million workers who earn below £10,000 will gain nothing from another rise, but all of those earning up to £120,000 will be better off (the personal allowance is tapered away at a rate of 50 per cent after £100,000 - a stealth tax introduced by Alistair Darling).  It is those in the second-richest decile who receive the most in cash terms from the policy (mainly due to the greater number of dual-earning households), followed by the richest tenth (who receive marginally less due to the tapering away of the allowance). As a percentage of income, it is middle-earners who gain the most, with those at the bottom gaining the least.

For these reasons, an increasing number of Lib Dems are calling for the party to support progressive alternatives to raising the tax threshold. The Centre Forum, the party's favourite think-tank, has proposed increasing the National Insurance threshold, which currently stands at £7,748, to help low-earners. As the IFS recently noted, aligning the NI threshold with the personal allowance would "cut taxes for 1.2 million workers with earnings too low to benefit from an increase in the personal allowance, would benefit only workers, and would simplify the direct tax system."

The reliably contrarian Lord Oakeshott has echoed this demand, stating that "Raising the income tax starting point to £10,000 is a great Liberal Democrat manifesto achievement but we should declare victory and move on, or we'll become victims of our own success. We've lifted 2 million out of income tax but left 1.2 million of them paying National Insurance contributions from around £7,750 a year." The Guardian reports that his concerns are shared by his political ally Vince Cable, who has also noted "the diminishing returns of the policy for the low paid." 

Other alternatives to raising the tax threshold include cutting VAT (which is paid by all and hits the poorest hardest) and raising in-work benefits such as tax credits. As the IFS noted, increasing the level at which the latter are withdrawn by 20 per cent would be "a bigger giveaway in entitlements to working families in the bottom three income deciles than the gains to that group of raising the personal allowance to £12,500, despite costing £10 billion per year less". 

But all of these measures lack the headline-grabbing potential of another cut in income tax. With the Tories considering making their own pledge to raise the personal allowance to £12,500, Clegg is determined not to relinquish ownership of the policy. But as he continues down this path, the divide between him and his party's redistributionists is one to watch. 

George Eaton is political editor of the New Statesman.

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Why is Labour surging in Wales?

A new poll suggests Labour will not be going gently into that good night. 

Well where did that come from? The first two Welsh opinion polls of the general election campaign had given the Conservatives all-time high levels of support, and suggested that they were on course for an historic breakthrough in Wales. For Labour, in its strongest of all heartlands where it has won every general election from 1922 onwards, this year had looked like a desperate rear-guard action to defend as much of what they held as possible.

But today’s new Welsh Political Barometer poll has shaken things up a bit. It shows Labour support up nine percentage points in a fortnight, to 44 percent. The Conservatives are down seven points, to 34 per cent. Having been apparently on course for major losses, the new poll suggests that Labour may even be able to make ground in Wales: on a uniform swing these figures would project Labour to regain the Gower seat they narrowly lost two years ago.

There has been a clear trend towards Labour in the Britain-wide polls in recent days, while the upwards spike in Conservative support at the start of the campaign has also eroded. Nonetheless, the turnaround in fortunes in Wales appears particularly dramatic. After we had begun to consider the prospect of a genuinely historic election, this latest reading of the public mood suggests something much more in line with the last century of Welsh electoral politics.

What has happened to change things so dramatically? One possibility is always that this is simply an outlier – the "rogue poll" that basic sampling theory suggests will happen every now and then. As us psephologists are often required to say, "it’s just one poll". It may also be, as has been suggested by former party pollster James Morris, that Labour gains across Britain are more apparent than real: a function of a rise in the propensity of Labour supporters to respond to polls.

But if we assume that the direction of change shown by this poll is correct, even if the exact magnitude may not be, what might lie behind this resurgence in Labour’s fortunes in Wales?

One factor may simply be Rhodri Morgan. Sampling for the poll started on Thursday last week – less than a day after the announcement of the death of the much-loved former First Minister. Much of Welsh media coverage of politics in the days since has, understandably, focused on sympathetic accounts of Mr Morgan’s record and legacy. It would hardly be surprising if that had had some positive impact on the poll ratings of Rhodri Morgan’s party – which, we should note, are up significantly in this new poll not only for the general election but also in voting intentions for the Welsh Assembly. If this has played a role, such a sympathy factor is likely to be short-lived: by polling day, people’s minds will probably have refocussed on the electoral choice ahead of them.

But it could also be that Labour’s campaign in Wales is working. While Labour have been making modest ground across Britain, in Wales there has been a determined effort by the party to run a separate campaign from that of the UK-wide party, under the "Welsh Labour" brand that carried them to victory in last year’s devolved election and this year’s local council contests. Today saw the launch of the Welsh Labour manifesto. Unlike two years ago, when the party’s Welsh manifesto was only a modestly Welshed-up version of the UK-wide document, the 2017 Welsh Labour manifesto is a completely separate document. At the launch, First Minister Carwyn Jones – who, despite not being a candidate in this election is fronting the Welsh Labour campaign – did not even mention Jeremy Corbyn.

Carwyn Jones also represented Labour at last week’s ITV-Wales debate – in contrast to 2015, when Labour’s spokesperson was then Shadow Welsh Secretary Owen Smith. Jones gave an effective performance, being probably the best performer alongside Plaid Cymru’s Leanne Wood. In fact, Wood was also a participant in the peculiar, May-less and Corbyn-less, ITV debate in Manchester last Thursday, where she again performed capably. But her party have as yet been wholly unable to turn this public platform into support. The new Welsh poll shows Plaid Cymru down to merely nine percent. Nor are there any signs yet that the election campaign is helping the Liberal Democrats - their six percent support in the new Welsh poll puts them, almost unbelievably, at an even lower level than they secured in the disastrous election of two year ago.

This is only one poll. And the more general narrowing of the polls across Britain will likely lead to further intensification, by the Conservatives and their supporters in the press, of the idea of the election as a choice between Theresa May and Jeremy Corbyn as potential Prime Ministers. Even in Wales, this contrast does not play well for Labour. But parties do not dominate the politics of a nation for nearly a century, as Labour has done in Wales, just by accident. Under a strong Conservative challenge they certainly are, but Welsh Labour is not about to go gently into that good night.

Roger Scully is Professor of Political Science in the Wales Governance Centre at Cardiff University.

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