Footballers don't necessarily work harder if they're paid more. Photo: Getty
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Transfer Deadline Day blows apart scare stories of Labour's plan to reinstate 50p tax rate

How footballers behave on Transfer Deadline Day suggests that raising the top tax rate isn't that dangerous.

Today sees a biannual event in which tens of thousands of people in our country glue themselves to their television and computer screens in a mass monitoring of a rare and globally mobile species. No I am not describing Autumnwatch with Bill Oddie. I am of course talking about Transfer Deadline Day, and the movements of many millionaire footballers across the globe.

The event twice a year when we can all watch members of the 1 per cent truly respond to national tax rates. For example, just monitor the movements today of Radamel Falcao; will he leave the tax haven of Monaco to come to England or Spain? The latter has a new 52 per cent tax rate.

Yet this more tracksuited version of what takes place daily in the financial sector also provides the first opportunity to test whether Labour’s plans to reinstate the 50p tax rate is having the apocalyptic effect that the Tories like to claim. How many of these starlets who are signing in and around the country will refuse to sign up for anything beyond six months for fear of the “war on the better off”, as the Telegraph’s Allister Heath describes a 5 per cent increase in taxation?

One of the big debates over the 50p rate is around the behavioural response it is claimed it creates. Of course there will be those who do choose a country by the lowest marginal tax rate, whether it is 45 per cent or 25 per cent. But the government argues that the behavioural response of such high-paid people coming to our country, and those already working here, would be huge. However, this argument relies on few facts and instead anecdotal evidence – a bit like rumours on Transfer Deadline Day.

Nevertheless, it does not stop there. As according to George Osborne’s logic since April 2012, players such as Wayne Rooney have been playing better, and working harder for their clubs. In fact, we should probably be thanking George Osborne (a Chelsea fan) for the excellent performance of the England team in the World Cup…

This is because the other plank of rightwingers' use of the behavioural argument by which Osborne axed the 50p rate is rarely disputed: that the rich work harder when taxed less. And to be fair, Rooney and other footballers earning over £1,000,000 a year (if we assume they declare this as income) may have indeed been training harder. But would it be because such a millionaire footballer has had an additional £700 a week more added to their current minimum of £20,000 a week?

Don’t get me wrong, £700 is a lot of money to me and most people. But to put it in perspective, that is the equivalent of the median earner who receives £517 a week (£26,800 a year) getting around an extra 18 quid a week more. Again not to be sniffed at, but not even enough for a Wayne Rooney hair appointment.

But would an £18 a week pay rise (or an increase in your wage by a 1/28) considerably raise the work rate of most people? I would hazard a guess that it probably would not in general. For example, would you work longer hours, such as an extra three hours a week, for a marginal pay rise of say £18, or would you be happy to get away at lunchtime on a Friday even if that meant you’d lose £18?

This is of course a relative question, given that those on middle and low incomes are more effected by other taxes such as VAT, than the average Premiership footballer. But surveys have shown that most people would rather work fewer hours even if this led to marginally lower pay. Shouldn’t we assume therefore that top millionaires are no different? Especially when you consider the proportions in pay they are dealing with.

So even if you are not interested in football nor footballers, you should still pay attention to this Transfer Deadline Day, and the whereabouts of Falcao, as it’ll be a prelude to one of the biggest arguments on taxation at the general election.

Photo: Getty Images
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Why are boundary changes bad for Labour?

New boundaries, a smaller House of Commons and the shift to individual electoral registration all tilt the electoral battlefield further towards the Conservatives. Why?

The government has confirmed it will push ahead with plans to reduce the House of Commons to 600 seats from 650.  Why is that such bad news for the Labour Party? 

The damage is twofold. The switch to individual electoral registration will hurt Labour more than its rivals. . Constituency boundaries in Britain are drawn on registered electors, not by population - the average seat has around 70,000 voters but a population of 90,000, although there are significant variations within that. On the whole, at present, Labour MPs tend to have seats with fewer voters than their Conservative counterparts. These changes were halted by the Liberal Democrats in the coalition years but are now back on course.

The new, 600-member constituencies will all but eliminate those variations on mainland Britain, although the Isle of Wight, and the Scottish island constituencies will remain special cases. The net effect will be to reduce the number of Labour seats - and to make the remaining seats more marginal. (Of the 50 seats that would have been eradicated had the 2013 review taken place, 35 were held by Labour, including deputy leader Tom Watson's seat of West Bromwich East.)

Why will Labour seats become more marginal? For the most part, as seats expand, they will take on increasing numbers of suburban and rural voters, who tend to vote Conservative. The city of Leicester is a good example: currently the city sends three Labour MPs to Westminster, each with large majorities. Under boundary changes, all three could become more marginal as they take on more wards from the surrounding county. Liz Kendall's Leicester West seat is likely to have a particularly large influx of Tory voters, turning the seat - a Labour stronghold since 1945 - into a marginal. 

The pattern is fairly consistent throughout the United Kingdom - Labour safe seats either vanishing or becoming marginal or even Tory seats. On Merseyside, three seats - Frank Field's Birkenhead, a Labour seat since 1950, and two marginal Labour held seats, Wirral South and Wirral West - will become two: a safe Labour seat, and a safe Conservative seat on the Wirral. Lillian Greenwood, the Shadow Transport Secretary, would see her Nottingham seat take more of the Nottinghamshire countryside, becoming a Conservative-held marginal. 

The traffic - at least in the 2013 review - was not entirely one-way. Jane Ellison, the Tory MP for Battersea, would find herself fighting a seat with a notional Labour majority of just under 3,000, as opposed to her current majority of close to 8,000. 

But the net effect of the boundary review and the shrinking of the size of the House of Commons would be to the advantage of the Conservatives. If the 2015 election had been held using the 2013 boundaries, the Tories would have a majority of 22 – and Labour would have just 216 seats against 232 now.

It may be, however, that Labour dodges a bullet – because while the boundary changes would have given the Conservatives a bigger majority, they would have significantly fewer MPs – down to 311 from 330, a loss of 19 members of Parliament. Although the whips are attempting to steady the nerves of backbenchers about the potential loss of their seats, that the number of Conservative MPs who face involuntary retirement due to boundary changes is bigger than the party’s parliamentary majority may force a U-Turn.

That said, Labour’s relatively weak electoral showing may calm jittery Tory MPs. Two months into Ed Miliband’s leadership, Labour averaged 39 per cent in the polls. They got 31 per cent of the vote in 2015. Two months into Tony Blair’s leadership, Labour were on 53 per cent of the vote. They got 43 per cent of the vote. A month and a half into Jeremy Corbyn’s leadership, Labour is on 31 per cent of the vote.  A Blair-style drop of ten points would see the Tories net 388 seats under the new boundaries, with Labour on 131. A smaller Miliband-style drop would give the Conservatives 364, and leave Labour with 153 MPs.  

On Labour’s current trajectory, Tory MPs who lose out due to boundary changes may feel comfortable in their chances of picking up a seat elsewhere. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog. He usually writes about politics.