Support 100 years of independent journalism.

  1. Politics
8 April 2015

The Tories’ decision to oppose Labour’s non-dom move is a serious error

By resisting this progressive policy, the Conservatives risk confirming their reputation as the political wing of the City of London. 

By George Eaton

Not since Ed Miliband pledged to freeze energy prices in his 2013 Labour conference speech have the Tories been as bamboozled by a policy as they have by his promise to abolish non-dom tax status. George Osborne led the Conservative response this morning, warning both that the move could “cost our country hundreds of millions of pounds in lost tax revenues and lost investment” (by deterring wealthy individuals who will now be required to pay tax on their overseas earnings) and that it could be “just tinkering around the edges”. Unable to settle on a line of attack, the Chancellor opted for confusion: the measure can’t be both punitive and “tinkering”. 

The Tories were later jubilant when they unearthed footage of Ed Balls warning in January that the full abolition of the non-dom rule would likely end “up costing Britain money because there’ll be some people who leave the country” (appearing to vindicate Osborne’s first attack). But as Balls himself has pointed out in a rebuttal on his website, the video was edited to exclude his declaration that “I think we can be tougher and we should be and we will”. Labour’s policy, which makes allowance for genuine temporary residents (such as university students), is consistent with his words. As Miliband said in his speech: “Real temporary residents, here for a brief period, will only have to pay tax on what they earn here. Because they will be paying their taxes in their place of permanent residence.”

The essential point remains that he has pledged to abolish the 216-year-old rule that allows typically wealthy individuals to avoid tax on their overseas earnings – even if they are permanently resident in the UK (an anomaly unique to this country). When the news was announced last night, the Tories, as I noted, had a choice: they could try and kill the policy or they could steal it. In choosing the former option, they have made a serious political error. Rather than engaging with the pedantic debate over whether Labour is truly “abolishing” non-dom status, most voters will see the Conservatives again defending the super rich. For a party whose biggest problem is its reputation as the political wing of the City of London, this is not a good look. The Tories are now protesting that up to 60 per cent of non-doms could be unaffected by Labour’s policy (since they are resident for less than five years). But even if true, is it really wise for them to side with the 40 per cent who would be? 

The smart move for the Tories to make would have been to simply accept Labour’s policy and claim credit for first proposing a small levy on non-doms (as Osborne did in his 2007 conference speech). That would have immediately taken the wind out of Miliband’s sails (as David Cameron did when he pledged not to increase VAT at the final PMQs). By instead forming a front against Labour’s progressive move, they have guaranteed political defeat.

Select and enter your email address Quick and essential guide to domestic and global politics from the New Statesman's politics team. A weekly newsletter helping you fit together the pieces of the global economic slowdown. The New Statesman’s global affairs newsletter, every Monday and Friday. The New Statesman’s weekly environment email on the politics, business and culture of the climate and nature crises - in your inbox every Thursday. Our weekly culture newsletter – from books and art to pop culture and memes – sent every Friday. A weekly round-up of some of the best articles featured in the most recent issue of the New Statesman, sent each Saturday. A newsletter showcasing the finest writing from the ideas section and the NS archive, covering political ideas, philosophy, criticism and intellectual history - sent every Wednesday. Sign up to receive information regarding NS events, subscription offers & product updates.
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU

Content from our partners
Why public health policy needs to refocus
The five key tech areas for the public sector in 2023
You wouldn’t give your house keys to anyone, so why do that with your computers?