Nick Clegg, David Cameron and Gordon Brown during the first TV leaders' debate in 2010. Photograph: Getty Images.
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When Cameron said "we cannot afford" a £10,000 tax threshold

The PM said during the first 2010 leaders' debate that the Lib Dem policy was too expensive.

With David Cameron again trying to claim credit for the increase in the income tax threshold to £10,000, it would be remiss not to post this exchange between him and Nick Clegg from the first leaders' debate in 2010. Back then, Cameron told his future deputy: (from 1:18:15 onwards):

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.

But after the Lib Dems forced the inclusion of the policy in the Coalition Agreement, Cameron has embraced it, with the Tories even listing it as their greatest achievement in government. With the threshold rising to £10,000 from this April (a year ahead of schedule), George Osborne is likely to announce in this month's Budget that it will be increased to £10,500 or even £10,750 next year. 

The policy, as I've noted before, is not as progressive as the Lib Dems suggest. At a time of falling living standards, raising the personal allowance will do nothing to help the five million lowest-paid workers who earn less than £10,000. It is those in the second-richest decile who 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. 

Progressive alternatives to raising the income tax threshold include increasing the National Insurance (NI) threshold, which currently stands at £7,748, cutting VAT, which stands at a record 20 per cent and hits the poorest hardest, or raising in-work benefits such as tax credits. As the IFS noted last week, 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." Alternatively, raising the level at which in-work benefits are withdrawn by 20 per cent would be "a bigger giveaway in entitlements to working families in the bottom three income deciles than the gains to that group of raising the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 whatever the flaws of the policy, Cameron deserves to be called out for championing a measure he once insisted was unaffordable. Britain, it turns out, wasn't "bankrupt" after all. 

George Eaton is political editor of the New Statesman.

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Italian PM Matteo Renzi resigns after referendum No vote

Europe's right-wing populists cheered the result. 

Italy's centrist Prime Minister Matteo Renzi was forced to resign late on Sunday after he lost a referendum on constitutional change.

With most ballots counted, 60 per cent of Italians voted No to change, according to the BBC. The turn out was nearly 70 per cent. 

Voters were asked whether they backed a reform to Italy's complex political system, but right-wing populists have interpreted the referendum as a wider poll on the direction of the country.

Before the result, former Ukip leader Nigel Farage tweeted: "Hope the exit polls in Italy are right. This vote looks to me to be more about the Euro than constitutional change."

The leader of France's far-right Front National, Marine Le Pen, tweeted "bravo" to her Eurosceptic "friend" Matteo Salvini, a politician who campaigned for the No vote. She described the referendum result as a "thirst for liberty". 

In his resignation speech, Renzi told reporters he took responsibility for the outcome and added "good luck to us all". 

Since gaining office in 2014, Renzi has been a reformist politician. He introduced same-sex civil unions, made employment laws more flexible and abolished small taxes, and was known by some as "Europe's last Blairite".

However, his proposed constitutional reforms divided opinion even among liberals, because of the way they removed certain checks and balances and handed increased power to the government.

 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.