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24 September 2014

Why the mansion tax is so deadly for the Tories

The policy gives Labour multiple opportunities to frame the Conservatives as the party of the rich. 

By George Eaton

No responsible politician ever takes a policy decision without considering the political consequences. But Ed Miliband’s decision to establish a £2.5bn fund to save the NHS through new taxes on mansions, tobacco firms and hedge funds was more political than most. It was designed to position Labour on the side of the saints, in the form of Britain’s most cherished public institution, and the Tories on the side of the sinners. 

The mansion tax, in particular (which a new Survation poll shows is backed by 72 per cent of the public) serves both political and fiscal purposes. The Tories’ opposition to the policy (as Matthew d’Ancona revealed in his account of the coalition, In It Together, David Cameron vetoed it on the grounds that “our donors would never put up with it”) offers Labour another chance to frame them as the party of the rich. When Miliband first adopted the idea in 2013, the Tories responded by writing to their wealthy donors soliciting funds to campaign against a “homes tax”, a fact that Labour gleefully cited as proof that the Prime Minister “stands up for the wrong people”.

The extent to which this impression damages the Tories was revealed by Cameron’s former policy director  

When I was director of the Conservative Research Department before the last election, we would get regular updates on focus-group research. The most illuminating were the picture boards that participants were asked to choose: if we were doing well, the young family, struggling under the weight of responsibility but with great ambitions for their children, was selected. It meant we were on their side. But if we were doing badly, the dreaded posh family in front of a mansion would come up – Conservatives were only on the side of rich people. Those two images tell you almost everything you need to know about the history of the Conservative Party’s electoral performance.

As Lord Ashcroft and other pollsters have long testified, the Tories’ biggest electoral handicap remains the belief that they are the party of the rich. But the Conservative have little time to change this perception now; the strategy has been set. Having failed to address the problem during the early years of modernisation, which focused excessively on social liberalism, to the detriment of economic reform, the Tories went on to compound it with the abolition of the 50p tax rate, the bedroom tax, and, of course, their opposition to a mansion tax. 

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