George Osborne’s decision to cut the top rate of tax for the richest was the moment this government’s facade of fairness disappeared for good. In these tough times, against the backdrop of the biggest squeeze in living standards for a generation and with the economy flat-lining, the Chancellor prioritised the millionaires above millions of working people.
There are 30 million tax payers in this country and the Chancellor decided to give the wealthiest 1% a tax cut. Of those 1%, there are 8,000 people who take home over a million pounds each year. From next April, each of these individuals will be given a tax-break worth on average £107,000.
It is not surprising that the rest of us look on in disbelief. For pensioners being hit by the Granny Tax or a family with children, who are £511 worse off this year because of further cuts, freezes and restrictions to benefits and tax credits, the decision seems perverse.
It is not merely a spectacularly unfair change to our tax system. It also reveals the Conservatives’ inability to be a Party of One Nation. A former speech-writer to David Cameron described the decision as ‘sending a missile into 6 years of modernisation’. After all those trips hugging hoodies, sledging with huskies and pretending to go green, the Chancellor destroyed any remaining credibility that the Conservative Party could govern for all.
Last week, the Prime Minister compared the economic situation to that of war. We are facing a period of national upheaval – we need to cut our deficit, rebalance our economy and build a fairer society. In the face of this challenge, Cameron and Osborne have shown a distinct lack of leadership.
During the Second World War, the public queued to get their copy of the Beveridge report because it set out the beginnings of a welfare state where everyone had a stake. In the aftermath of war, that same sense of national mission led to the creation of the NHS. The public, especially in tough times, long for a sense of collective spirit – as we saw in those Olympic weeks in the summer.
But this government does not understand this need for one nation politics. When historians write about this period, they will say this government was confrontational, failing to inspire and unite. Of the richest who are receiving Osborne’s tax give-away, 85% are men. At the same time, 70% of the revenue raised from direct tax and benefit changes are to come from women. Over half of the millionaires in this country live in London and the South-East, and at the same time we see long-term unemployment rise in the north. The millionaire’s tax cut embodies the hypocritical notion that the poor are expected to work harder because otherwise they will be made poorer, but the rich will only work harder by making them richer. This is the politics of a government that divides.
Ed Miliband’s One Nation Labour understands the need to bring people together and to share the burden of sacrifice fairly. We must be the party that stands up for the private and the public sector, the north and the south, middle income families and those in poverty.
That is why today, in the debate on the millionaire’s tax give-away, it was the Labour Party which stood up for vast majority who are struggling whilst the economy is flat-lining. It is why each time a Tory MP stood up to defend the decision, I was reminded that we are the only party that can govern for One Nation.
Rachel Reeves MP is the Shadow Chief Secretary to the Treasury