Proudly trumpeting a tax cut for the rich. (Photo: Peter Macdiarmid)
Show Hide image

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.

YouTube screengrab
Show Hide image

“Trembling, shaking / Oh, my heart is aching”: the EU out campaign song will give you chills

But not in a good way.

You know the story. Some old guys with vague dreams of empire want Britain to leave the European Union. They’ve been kicking up such a big fuss over the past few years that the government is letting the public decide.

And what is it that sways a largely politically indifferent electorate? Strikes hope in their hearts for a mildly less bureaucratic yet dangerously human rights-free future? An anthem, of course!

Originally by Carly You’re so Vain Simon, this is the song the Leave.EU campaign (Nigel Farage’s chosen group) has chosen. It is performed by the singer Antonia Suñer, for whom freedom from the technofederalists couldn’t come any suñer.

Here are the lyrics, of which your mole has done a close reading. But essentially it’s just nature imagery with fascist undertones and some heartburn.

"Let the river run

"Let all the dreamers

"Wake the nation.

"Come, the new Jerusalem."

Don’t use a river metaphor in anything political, unless you actively want to evoke Enoch Powell. Also, Jerusalem? That’s a bit... strong, isn’t it? Heavy connotations of being a little bit too Englandy.

"Silver cities rise,

"The morning lights,

"The streets that meet them,

"And sirens call them on

"With a song."

Sirens and streets. Doesn’t sound like a wholly un-authoritarian view of the UK’s EU-free future to me.

"It’s asking for the taking,

"Trembling, shaking,

"Oh, my heart is aching."

A reference to the elderly nature of many of the UK’s eurosceptics, perhaps?

"We’re coming to the edge,

"Running on the water,

"Coming through the fog,

"Your sons and daughters."

I feel like this is something to do with the hosepipe ban.

"We the great and small,

"Stand on a star,

"And blaze a trail of desire,

"Through the dark’ning dawn."

Everyone will have to speak this kind of English in the new Jerusalem, m'lady, oft with shorten’d words which will leave you feeling cringéd.

"It’s asking for the taking.

"Come run with me now,

"The sky is the colour of blue,

"You’ve never even seen,

"In the eyes of your lover."

I think this means: no one has ever loved anyone with the same colour eyes as the EU flag.

I'm a mole, innit.