Proudly trumpeting a tax cut for the rich. (Photo: Peter Macdiarmid)
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Budget 2015: The great tax giveaway to the rich masquerading as help for the poor

Raising the personal allowance does not help who it is supposed to.

There is no policy that George Osborne will trumpet more proudly than the increase in the personal allowance: evidence of a Conservative Party simultaneously helping the poorest and rewarding work.

Of course, the policy is a Liberal Democrat one. When Nick Clegg advocated the increase in the personal allowance during a TV debate five years ago, David Cameron said: “I would love to take everyone out of their first £10,000 of income tax, Nick...We cannot afford it.” The coalition has not just lifted the tax-free personal allowance to the Lib Dems’ target, but also exceeded it. Next month, the personal allowance will rise to £10,600 – and there are heavy hints that George Chancellor will today announced a further increase in the allowance in £11,000. In an era when voters are used to broken promises, the policy is a welcome antidote: an example of politicians under-promising and over-delivering.

The only problem, of course, is it does almost nothing to help those who the policy was designed for: those struggling on low incomes. "The UK’s five million lowest-paid employees will gain nothing at all," says Adam Corlett of the Resolution Foundation. Raising the personal allowance is useless for those earning less than £10,600, but much appreciated by the highest earners. Increasing the personal allowance to £12,500 would be worth £28 a year to the poorest 20 per cent of households, but £445 a year to the richest 20 per cent. It is a massive tax cut for the rich masquerading as substantive help for the poorest in society. And increasing tax on the poor is funding it. After today’s Budget, the total cost of increasing the personal allowance this Parliament will be about £14 billion – or about the same as the cost of the hike in VAT from 17.5 to 20 per cent, a tax that is as regressive as they come.

In a saner political climate, the coalition partners would be fighting to blame the increase on the personal allowance on each other, not to claim the credit. A policy that is superficially appealing when explained on the back of a cigarette packet is best left there.

Not that other parties have learned the lesson. Labour’s policy to cut tuition fees to £6,000 amounts to an annual £2.5 billion tax cut for City high-flyers, while doing nothing to improve access to universities. The problems with University policy are not £9,000 fees that you don’t pay back if you are not successful, but the derisory provision of maintenance grants and egregious fall in part-time and mature students. But these issues, critically important as they are, did not lead to effigies of Nick Clegg being burned, so Labour have calculated that there is less political gain to be had addressing them.

Even Ukip, those supposed purveyors of home truths, are as guilty of prioritising gimmickry over good policy. While their income tax proposals are couched in the language of helping the lowest earners, they would give an extra £1,143 a year to the richest 10 per cent – and just £35 to the poorest 10 per cent.

Tim Wigmore is a contributing writer to the New Statesman and the author of Second XI: Cricket In Its Outposts.

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Why it's a mistake to assume that Jeremy Corbyn has already won

The shadow chief secretary to the Treasury on why the race to be Labour's leader is far from over.

They think it’s all over.

But they’re wrong.

The fat lady has yet to sing.

The commentary and reporting around the Labour party leadership campaign has started to assume we have a winner already in Jeremy Corbyn. The analysis, conjecture, predictions/complete guesswork about what happens next has begun in earnest. So we have seen speculation about who will be appointed to a Corbyn shadow cabinet, and “meet the team” pieces about Jeremy’s backroom operation.

Which is all very interesting and makes for the usual Westminster knockabout of who might be up and who might be going in the other direction pdq...

But I think it’s a mistake to say that Jeremy has already won.

Because I hear that tens of thousands of Labour party members, affiliates and registered supporters are yet to receive their ballot papers. And I am one of them. I can’t remember the last time I checked my post quite so religiously! But alas, my papers are yet to arrive.

This worries me a bit about the process. But mostly (assuming all the remaining ballots finally land in enough time to let us all vote) it tells me that frankly it’s still game on as far as the battle to become the next leader of the Labour party is concerned.

And this is reinforced when we consider the tens of thousands who have apparently received their papers but who have yet to vote. At every event I have attended in the last couple of weeks, and in at least half of all conversations I have had with members across the country, members are still making their minds up.

This is why we have to continue fighting for every vote until the end – and I will be fighting to get out every vote I possibly can for Yvette Cooper.

Over the campaign, Yvette has shown that she has a clear vision of the kind of Britain that she wants to see.

A Britain that tackles head-on the challenges of globalisation. Instead of the low-wage low-skill cul-de-sac being crafted by the Tories, Yvette's vision is for 2m more high skill manufacturing jobs. To support families she will prioritise a modern childcare system with 30 hours of fully funded child care for all 3 and 4 year olds and she will revive the bravery of post war governments to make sure 2m more homes are built within ten years.

It's an optimistic vision which taps into what most people in this country want. A job and a home.

And the responses of the focus groups on Newsnight a few days ago were telling – Yvette is clearly best placed to take us on the long journey to the 2020 general election by winning back former Labour voters.

We will not win an election without winning these groups back – and we will have to move some people who were in the blue column this time, to the red one next time. There is no other way to do it – and Yvette is the only person who can grow our party outwards so that once again we can build a winning coalition of voters across the country.