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.

Photo: Getty
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The rise of the green mayor – Sadiq Khan and the politics of clean energy

At an event at Tate Modern, Sadiq Khan pledged to clean up London's act.

On Thursday night, deep in the bowls of Tate Modern’s turbine hall, London Mayor Sadiq Khan renewed his promise to make the capital a world leader in clean energy and air. Yet his focus was as much on people as power plants – in particular, the need for local authorities to lead where central governments will not.

Khan was there to introduce the screening of a new documentary, From the Ashes, about the demise of the American coal industry. As he noted, Britain continues to battle against the legacy of fossil fuels: “In London today we burn very little coal but we are facing new air pollution challenges brought about for different reasons." 

At a time when the world's leaders are struggling to keep international agreements on climate change afloat, what can mayors do? Khan has pledged to buy only hybrid and zero-emissions buses from next year, and is working towards London becoming a zero carbon city.

Khan has, of course, also gained heroic status for being a bête noire of climate-change-denier-in-chief Donald Trump. On the US president's withdrawal from the Paris Agreement, Khan quipped: “If only he had withdrawn from Twitter.” He had more favourable things to say about the former mayor of New York and climate change activist Michael Bloomberg, who Khan said hailed from “the second greatest city in the world.”

Yet behind his humour was a serious point. Local authorities are having to pick up where both countries' central governments are leaving a void – in improving our air and supporting renewable technology and jobs. Most concerning of all, perhaps, is the way that interest groups representing business are slashing away at the regulations which protect public health, and claiming it as a virtue.

In the UK, documents leaked to Greenpeace’s energy desk show that a government-backed initiative considered proposals for reducing EU rules on fire-safety on the very day of the Grenfell Tower fire. The director of this Red Tape Initiative, Nick Tyrone, told the Guardian that these proposals were rejected. Yet government attempts to water down other EU regulations, such as the energy efficiency directive, still stand.

In America, this blame-game is even more highly charged. Republicans have sworn to replace what they describe as Obama’s “war on coal” with a war on regulation. “I am taking historic steps to lift the restrictions on American energy, to reverse government intrusion, and to cancel job-killing regulations,” Trump announced in March. While he has vowed “to promote clean air and clear water,” he has almost simultaneously signed an order to unravel the Clean Water Rule.

This rhetoric is hurting the very people it claims to protect: miners. From the Ashes shows the many ways that the industry harms wider public health, from water contamination, to air pollution. It also makes a strong case that the American coal industry is in terminal decline, regardless of possibile interventions from government or carbon capture.

Charities like Bloomberg can only do so much to pick up the pieces. The foundation, which helped fund the film, now not only helps support job training programs in coal communities after the Trump administration pulled their funding, but in recent weeks it also promised $15m to UN efforts to tackle climate change – again to help cover Trump's withdrawal from Paris Agreement. “I'm a bit worried about how many cards we're going to have to keep adding to the end of the film”, joked Antha Williams, a Bloomberg representative at the screening, with gallows humour.

Hope also lies with local governments and mayors. The publication of the mayor’s own environment strategy is coming “soon”. Speaking in panel discussion after the film, his deputy mayor for environment and energy, Shirley Rodrigues, described the move to a cleaner future as "an inevitable transition".

Confronting the troubled legacies of our fossil fuel past will not be easy. "We have our own experiences here of our coal mining communities being devastated by the closure of their mines," said Khan. But clean air begins with clean politics; maintaining old ways at the price of health is not one any government must pay. 

'From The Ashes' will premiere on National Geograhpic in the United Kingdom at 9pm on Tuesday, June 27th.

India Bourke is an environment writer and editorial assistant at the New Statesman.

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