Leader: Lessons for Labour from an Essex Tory MP
Robert Halfon's call for the reinstatement of the 10p income-tax band could be a winning idea for Miliband.
Rarely in recent history has the Conservatives’ self-image as the natural party of government seemed less appropriate. Unappeased by David Cameron’s promise of a referendum on Britain’s membership of the EU, Tory MPs have taken to plotting and scheming against the Prime Minister even as his poll ratings remain better than those of his party.
The same malcontents went on to vote against same-sex marriage in greater numbers than in favour of it, sabotaging a rare opportunity for Mr Cameron to prove that his party had changed. This is not the party of “modern, compassionate” Conservatism that he promised to build when he was elected leader in 2005.
Faced with the compromises of coalition, Tory MPs remain aggrieved by Mr Cameron’s failure to win a majority against an enfeebled Labour Party in 2010. Yet their belief that he did so because he was insufficiently Conservative is delusional. The party remained untrusted by public-sector workers, by northerners and Scots and, most notably, by ethnic minorities, just 16 per cent of whom voted Conservative.
Yet beyond the party’s revanchist wing there are Conservatives beginning to think hard about how they can avoid a similar failure in 2015. One of them is Robert Halfon, the MP for Harlow, one of the Essex new towns built after the war. Elected in 2010 at the third time of trying (he lost the bellwether constituency by just 97 votes in 2005), Mr Halfon recognises that, in order to win a majority, the Tories must attract more low-income and working-class voters and that to do so the party must focus relentlessly on reducing the cost of living.
His perspective is shaped by the Essex constituency he represents, where most voters earn less than the national median wage and where 30 per cent live in social housing. He led the successful campaign for a freeze in fuel duty and, in an insightful pamphlet, Stop the union-bashing, called for the Conservatives to end their hostility towards trade unions, “the very core of the Big Society”, and to offer free party membership to all union members.
In anticipation of the Budget on 20 March, Mr Halfon has made his most audacious proposal yet. The MP is calling for the reinstatement of the 10p income-tax band infamously abolished by Gordon Brown in his valedictory Budget in 2007. After trying and failing to persuade George Osborne not to scrap the 50p top income-tax rate (“At a stroke, it would allow our opponents to re-characterise the Conservatives as being the party of the rich,” he wrote presciently in an article for ConservativeHome in October 2011), Mr Halfon argues that his party must show that it is “not just interested in tax cuts for the rich”.
He would restore the 10p tax band for earnings between the personal allowance, which will rise to £9,440 in April, and £12,000, a measure worth £256 to basic-rate taxpayers. Displaying the kind of political astuteness that Mr Osborne has recently lacked, he has proposed meeting the £6bn-a-year cost of the policy by ring-fencing revenue from the 45p top rate of tax in an explicit act of redistribution. The Treasury, unsurprisingly, is beginning to take an interest.
Mr Halfon is right to seek to reduce the tax burden for low earners. Since the removal of the 10p tax rate, individuals pay a de facto marginal rate of 32 per cent (20 per cent income tax and 12 per cent National Insurance) on all earnings above the personal allowance. This, combined with VAT of 20 per cent, record petrol prices, ever-rising train fares and pension contributions and, for young people, student loan repayments, has squeezed real incomes at a rate unknown at any other point in modern times.
Ed Miliband, to his credit, was quicker to highlight this phenomenon than either his Conservative or Liberal Democrat counterparts. But while speaking encouragingly of how a Labour government could widen payment of the living wage, for instance by making it a condition of public-sector contracts, he has had little to say about reducing the tax burden. True, Labour has proposed a reduction in VAT from 20 per cent back to 17.5 per cent but as a stimulus measure this would, by definition, be temporary. With economic conditions so volatile, Mr Miliband is right not to commit to expensive tax cuts at this stage of the electoral cycle. But he should begin to offer voters some indication of his direction of travel.
In an interview with the New Statesman last year, the Labour leader rightly observed that “people are out of love with an uncontrolled market but they’re certainly not in love with a remote state”. By refusing to countenance tax cuts for low and middle earners (we consider National Insurance to be a form of income tax), Mr Miliband is in danger of reverting to statist type. In the lead-up to an election that will be defined by the issue of living standards, Labour must begin work now on a range of measures to ease the burden on low-income families – and it could do worse than seek to learn from Mr Halfon.