Not as progressive as he likes to make out. Photo: Getty Images
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How does Labour move on from tax and spend?

Voting against further increases to the personal allowance would expose George Osborne's rhetoric for what it is.

Last week saw publication of the Conservative Government’s first Finance Bill. It’s through the Finance Bill that the Tories will give legal form to the tax measures announced in their Summer Budget.

And they make an ignominious start. True, they never promised us a Rose Garden. But, I beg your pardon, the Conservative Manifesto did promise not to increase rates of income tax. And the very first clause of that very first Bill breaks that promise by busting the ‘Tax Lock’ to permit a 7.5 per cent increase in income tax paid on dividends.

Nor was this the only tax promise to fail to survive the nine weeks from General Election to Summer Budget. The Tories also pledged to “increase the annual tax charges paid by those with non-domiciled status, ensuring that they make a fair contribution to reducing the deficit.” But the Budget gave us no increase in the annual charges. Instead we have some fairly modest changes which will remove the benefit of the status from those unlikely to have been entitled to claim it in the first place.

But, “over-firm” though the Manifesto commitments may be revealed to be, and with a second reading today, the task before Labour is to work out before the Committee stages in September where it stands on the Finance Bill measures.  

I’ll offer some thoughts in the coming days.

And I’ll assume Labour wants to shrug off the clothing of tax and spend and ask, instead, how it might wear its new garb whilst enhancing Labour values?  To do so is to accept, for the time being at least, the Conservatives’ narrative around the ‘right’ size of the state. Revisiting that question can await another day.

The first measure Labour should oppose is the proposed rise in the personal allowance.

Cameron spoke last month on the need to end the merry-go-round of “people working on the minimum wage having that money taxed by the government and then the government giving them that money back – and more – in welfare.”

But raising the personal allowance is medicine that gets nowhere near where the trouble is. There are several reasons why this is so. But most important: however high you raise the personal allowance, employers still have to deduct tax on income – in the form of National Insurance contributions – and pay it over to government.

As things stand, someone on minimum wage could work 31 hours a week before she had to start paying income tax. But she could only work 23 hours before paying National Insurance contributions.

If you really want to end the “ridiculous merry-go-round” you don’t focus on income tax which kicks in at 32 hours but on National Insurance contributions which kick in at 24 hours.

It’s just the wrong solution.

Raising the personal allowance is terrible policy for other reasons too.

It’s regressive: the lowest earning 46 per cent of adults already earn too little to pay income tax. Raising the personal allowance does nothing to help them. Indeed, those who presently benefit most in cash terms are, as IFS has identified, the second richest decile in the income distribution.

With the lower half of the adult income distribution already outside income tax the scope for helping the poorest through the tax system is limited. Tax credits are the sharpest way to target help at those who need it most. If, for reasons of ideology, you’ve discarded them from your tool box you’re left with blunter instruments. But here are two.

Council tax is highly regressive. In 2013/14, even net of Council Tax Support, it represented a staggering 13.5 per cent of the earnings of the poorest 20 per cent of households and only 1.9 per cent of the richest (source ONS) (6.4 per cent/4.3 per cent/3.1 per cent for intermediate quintiles). The case for spending part of that £4bn a year cost of raising the personal allowance to £12,500 on reducing this unfairness makes itself.

Compelling, too, although better understood, is the argument, already made above, for raising the level at which workers become liable to pay National Insurance contributions. If you spend that £4bn on raising the point at which you start to pay 12 per cent National Insurance contributions you can benefit those in work who earn £8,060 and above, reaching much further down the income distribution curve. Then you really will start to get people off the roundabout.

Of course, whatever you propose, the reality is that the Tories will press ahead, regardless, with increasing the personal allowance. And it is far, far too early to begin to formulate manifesto policies for 2020. But even at this stage in the electoral cycle there is work to be done in exposing the reality of Osborne’s One Nation rhetoric: a suite of tax policies which do nothing for the poorest and distribute their fruits to those who need them least. 

Jolyon Maugham​ is a barrister who specialises in tax. He advised the Labour party on tax policy, and blogs regularly on taxation here.

Jolyon Maugham is a barrister who advised Ed Miliband on tax policy. He blogs at Waiting for Tax, and writes for the NS on tax and legal issues. 

John Moore
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The man who created the fake Tube sign explains why he did it

"We need to consider the fact that fake news isn't always fake news at the source," says John Moore.

"I wrote that at 8 o'clock on the evening and before midday the next day it had been read out in the Houses of Parliament."

John Moore, a 44-year-old doctor from Windsor, is describing the whirlwind process by which his social media response to Wednesday's Westminster attack became national news.

Moore used a Tube-sign generator on the evening after the attack to create a sign on a TfL Service Announcement board that read: "All terrorists are politely reminded that THIS IS LONDON and whatever you do to us we will drink tea and jolly well carry on thank you." Within three hours, it had just fifty shares. By the morning, it had accumulated 200. Yet by the afternoon, over 30,000 people had shared Moore's post, which was then read aloud on BBC Radio 4 and called a "wonderful tribute" by prime minister Theresa May, who at the time believed it was a genuine Underground sign. 

"I think you have to be very mindful of how powerful the internet is," says Moore, whose viral post was quickly debunked by social media users and then national newspapers such as the Guardian and the Sun. On Thursday, the online world split into two camps: those spreading the word that the sign was "fake news" and urging people not to share it, and those who said that it didn't matter that it was fake - the sentiment was what was important. 

Moore agrees with the latter camp. "I never claimed it was a real tube sign, I never claimed that at all," he says. "In my opinion the only fake news about that sign is that it has been reported as fake news. It was literally just how I was feeling at the time."

Moore was motivated to create and post the sign when he was struck by the "very British response" to the Westminster attack. "There was no sort of knee-jerk Islamaphobia, there was no dramatisation, it was all pretty much, I thought, very calm reporting," he says. "So my initial thought at the time was just a bit of pride in how London had reacted really." Though he saw other, real Tube signs online, he wanted to create his own in order to create a tribute that specifically epitomised the "very London" response. 

Yet though Moore insists he never claimed the sign was real, his caption on the image - which now has 100,800 shares - is arguably misleading. "Quintessentially British..." Moore wrote on his Facebook post, and agrees now that this was ambiguous. "It was meant to relate to the reaction that I saw in London in that day which I just thought was very calm and measured. What the sign was trying to do was capture the spirit I'd seen, so that's what I was actually talking about."

Not only did Moore not mean to mislead, he is actually shocked that anyone thought the sign was real. 

"I'm reasonably digitally savvy and I was extremely shocked that anyone thought it was real," he says, explaining that he thought everyone would be able to spot a fake after a "You ain't no muslim bruv" sign went viral after the Leytonstone Tube attack in 2015. "I thought this is an internet meme that people know isn't true and it's fine to do because this is a digital thing in a digital world."

Yet despite his intentions, Moore's sign has become the centre of debate about whether "nice" fake news is as problematic as that which was notoriously spread during the 2016 United States Presidential elections. Though Moore can understand this perspective, he ultimately feels as though the sentiment behind the sign makes it acceptable. 

"I use the word fake in inverted commas because I think fake implies the intention to deceive and there wasn't [any]... I think if the sentiment is ok then I think it is ok. I think if you were trying to be divisive and you were trying to stir up controversy or influence people's behaviour then perhaps I wouldn't have chosen that forum but I think when you're only expressing your own emotion, I think it's ok.

"The fact that it became so-called fake news was down to other people's interpretation and not down to the actual intention... So in many interesting ways you can see that fake news doesn't even have to originate from the source of the news."

Though Moore was initially "extremely shocked" at the reponse to his post, he says that on reflection he is "pretty proud". 

"I'm glad that other people, even the powers that be, found it an appropriate phrase to use," he says. "I also think social media is often denigrated as a source of evil and bad things in the world, but on occasion I think it can be used for very positive things. I think the vast majority of people who shared my post and liked my post have actually found the phrase and the sentiment useful to them, so I think we have to give social media a fair judgement at times and respect the fact it can be a source for good."

Amelia Tait is a technology and digital culture writer at the New Statesman.