A Mansion Tax to fund a 10p Tax Rate – Ed Miliband’s speech in full

February 14, 2013 11:12 am

It is great to be here in Bedford.

In 1957, the Conservative Prime Minister Harold Macmillan gave a speech just across the river here, to celebrate Britain’s economic success.

New jobs, higher wages, greater opportunities for people to make something better for themselves and for their families.

It became known as the speech where he declared “you’ve never had it so good”.

Today in Bedford, in Britain as a whole, things are very different.

Small business-people are working harder than ever before.

People are working harder than ever before.

But for far too many, wages are falling and prices are rising. They’re getting worse off.

Far from feeling they have never had it so good, millions across Britain today fear they will never have it so good again. Life for them, and for their children.

The question that people ask me the most is “how do we turn this round?”

 

That’s why I have come to Bedford today.

Because I think it starts with a truth that we have forgotten as a country:
That economic recovery will be made by the many, not just by a few at the top.

Britain needs great, successful big business leaders.

It needs them to feel rewarded and supported.

But they know better than anyone that they can’t succeed alone.

It is only when working people have confidence and security.

 

When everyone’s sons and daughters have chances to work and learn new skills.

When enterprising small businesses can flourish and succeed.

And when together we build world-class services – from childcare for our kids to new roads and rail – that we will succeed again as a nation.

That’s not a Labour idea or a Conservative idea.

It is a British idea.

And it is what I want to talk to you about today.

Previous generations knew the truth:

Our economic success depends on the success of all working people.
In the industrial revolution, it wasn’t just the mill owners and the factory bosses who drove our economy forward.

It was the people who went down the mines, spun the cotton, built the ships, and constructed the bridges.

Many of our world-leading engineers and inventors came from ordinary families, people like the great engineer, Thomas Telford, and the inventor of the railway, Robert Stephenson.

And in the 19th century, Britain improved housing, built proper sanitation, ensured good working conditions, not just because it was fair, but because it was essential for our economy to succeed.

Our country knew that economic success was made by the many, not just by a few at the top.

You know that here in Bedford better than anyone.

From the industrial revolution to well into the twentieth century, the Stewartby brick works, just down the road, gave jobs to thousands of people.

The bricks the people of Bedford made constructed the houses that they and so many others lived in.

And it was the good wages they earned that made it possible for them to afford those homes.

Economic success was built with the hands of working people.

But could only be sustained through the pockets of working people.

And Britain knew this lesson too after the Second World War.

We built great new public services to improve people’s lives.

But the NHS and free education didn’t just do that, they strengthened our economy as well.

I think of my dad, who came to Britain as an immigrant, was able to learn English at Technical College, went on to join the Royal Navy, and saw the new post-war economy built.

It was only possible, because Britain knew that only a healthy, better educated workforce could compete with the best in the world.

An economy made by the many not by the few.

And you know somewhere along the way we forgot that lesson as a country. We need to relearn that lesson.

People in Britain are putting in the hours – doing the shifts – as never before.

But something has changed in the last few years.

There’s less chance of promotion.

Less chance of a pay rise.

And prices just go up and up and up.

Petrol for the car. Tickets for the train.

Childcare for the kids. Deposits for a first home.

The “squeezed middle” has never been so squeezed.

And if we carry on as we are it will be like that for years to come.
It’s no wonder our economy isn’t growing when people can’t afford to buy the things that British businesses try to sell.

And then think too about the skills of working people that we need for our economy to succeed.

Young people here in this training centre are getting the help, but so many young people across Britain aren’t.

Every time a young person with ambition and talent can’t get on, it isn’t just bad for them. It is bad for our economy.

Some of you here today run small businesses.

Your businesses are vital to our economy.

But today, many small businesses across Britain just don’t have the orders to keep them growing, hiring and investing.

And all they hear from the banks are promises about how things will get better tomorrow.

But tomorrow never seems to come.

You know better than anyone that every time someone with a great idea for a business is knocked back, it isn’t just bad for them. Britain’s economy is weakened too.

So today, Britain’s economy is just not working for working people.
And that’s why it isn’t working for Britain. It’s no mystery as to why we’re in the trouble we’re in.

The squeeze on working people has deep roots.

Hard as it is to believe, over the last three decades or so, less than 15 pence of every additional pound Britain has made has gone to an entire half of the population

While 24 pence in every pound has gone to the top 1 per cent of earners.

The last Labour government took action to change this.

Labour helped families with the minimum wage and tax credits.
It made a difference.

But it wasn’t enough.

The problem now is that things are getting worse not better.

This Government promised change. But change isn’t coming.

They are cutting taxes for one group this year.

The very richest in society.

This April, people earning over a million pounds a year will get an average tax cut of £100,000.

Now, we need very successful entrepreneurs in Britain.

Making profits. Being rewarded.

But we can’t succeed as a country just by hoping wealth will trickle down from those at the top to everyone else.

Our economy won’t turn around that way.

That’s why it’s not right to be cutting taxes for the very richest when everyone else is just seeing their living standards squeezed.

You know, somebody said to me recently: this Government seems to be the first in our history to believe that you can base a whole economic strategy on the misery rather than the success of the working people of the country.

They cut the tax credits that make work pay for millions.

They take the side of the train companies, the energy companies and the petrol companies while we pay more for train tickets, energy bills and the fuel for the car.

David Cameron talks about a global race.

And it is essential that we can compete with China and India and others.

But I have to tell you, Britain won’t win a race to the bottom.

By competing in the world as a low skill, low wage economy.

You know this here, which is why you are working so hard, providing the training.

So all we are offered at the moment is the promise of wealth trickling down from the top, squeezing the middle further and a race to the bottom.

It doesn’t work.

And that’s been shown over the last two and half years.

We were promised that we could have growth and a lower deficit.

In fact, we’ve had almost no growth and the deficit is rising again.
That’s because people aren’t in work paying taxes.

Too many are out of work and on benefits.
And, what’s worse, this approach can’t work.

Because we will only build prosperity, when everyone plays their part.

To do that we need a new One Nation strategy for the British economy.

The starting point is that the recovery will be made by the many not just by a few at the top.

We cannot go on with an approach that simply promises more of the same: year after year of squeezed living standards for the majority of working people.

It’s wrong for them and it’s wrong for our economy.

We have said we should start with a temporary cut in VAT as part of our 5-point plan, cancelling the millionaire’s tax cut, and not cutting tax credits this April.

The approach we need is not just different from this Government; it is also different from the last.

After the next election, there will be less money around.

We know that we will inherit a high deficit and we will face difficult choices.

But we have also learnt from this government that without a plan for growth, a plan to tackle the deficit will fail.

And it is different choices and new priorities that will turn our economy around.

That means starting by protecting the incomes of working people with new priorities in taxation.

The One Nation Labour government led by me will put a fairer tax system at the heart of its new priorities.

It is a crucial part of how we build an economy where everyone can play their part.

A One Nation Labour budget next month would lay the foundations for a recovery made by the many, not just a few at the top.

Let me tell you about one crucial choice we would make, which is different from this government.

We would tax houses worth over £2 million.

And we would use the money to cut taxes for working people.

We would put right a mistake made by Gordon Brown and the last Labour government.

We would use the money raised by a mansion tax to reintroduce a lower 10 pence starting rate of tax, with the size of the band depending on the amount raised.

This would benefit 25 million basic rate taxpayers.

Moving Labour on from the past and putting Labour where it should always have been, on the side of working people.

Showing our priority to do everything we can to make a difference to
people’s living standards.

Sending a message about how Britain is going to succeed in the years ahead:

That when you play your part, when you make your contribution to the economy, you will be rewarded.

And that Britain’s economic success will be built by the many, not just by a few at the top.

That is why Ed Balls and I want a 10 pence tax rate and a mansion tax in government.

We’ve rightly said that we will only set out our tax and spending commitments at the next general election.

That is the way a responsible opposition should conduct itself.

However this is a clear signal about the priority we attach to a fairer tax system and the living standards of working people.

We would also be making different choices between the most powerful in our society and ordinary working people.

Working people are paying more than they should, from energy to credit, and we would take action to

  • Break the stranglehold of the big six energy suppliers.

 

  • Stop the train company price rip-offs on the most popular routes.

 

  • Introduce new rules to stop unfair bank charges.

 

  • And cap interest on payday loans.

But this is only a beginning of a plan to build a One Nation economy.
The biggest changes Britain needs will come from economic reform.
Let’s start with skills.

As you all know, Britain needs to have the best skilled workforce in the world if we are going to compete.

The industrial revolution was built on the skills of the best workers in the world.

In more recent decades, Britain’s Universities have given us some of the world’s greatest scientists and innovators.

Today, however, we still lag well behind our competitors in productivity.
Not because we don’t work hard.

We do.

We work longer hours than many of our competitors.

It is because we’re not doing enough to get the best out of everyone, in particular the 50% of young people who don’t go to University.

That is where the next wave of productivity and growth must come from in an economy made by the many not just a few at the top.

We need a revolution in vocational education and apprenticeships.

Of course, I want young people from all backgrounds to aspire to go to University.

But I also want young people who are awarded an apprenticeship to know that Britain values you.

That means our country has to change.

We must end the culture which says University is always best and vocational education is second-best.

It simply isn’t true.

That’s why One Nation Labour will create a new technical baccalaureate, to complement A-levels.

So a 14-year old knows the qualifications they should be aiming for at 18.
It will give employers the control of the money for training for the first time so that young people are trained in the skills they need for the future.

And we will demand that Britain’s employers step up and offer real apprenticeships and training right across the country.

I know that so many great British companies want to play their part in leading this revolution: training our workforce and investing in our future.

But we can’t just provide people with the skills and then sit back and expect the right jobs to be there for them automatically.

We must also work together to ensure that better jobs are being created in our economy.

Today, we are increasingly two nations: with high skill, high paying jobs for those at the very top but low-skill, low paid, long hours jobs for too many people.

That’s because over the last three decades, we have seen fewer and fewer middle-income jobs in Britain.

That’s fewer jobs in skilled trades and more jobs paying less, with greater insecurity.

We must turn this round.

So a One Nation economy needs to support businesses that create sustainable, middle-income jobs.

That means a modern industrial policy that supports the sectors that will create those jobs of the future like the green industries that are so important for our country.

And an end to the short-termism which prevents many businesses investing.

Let me give you an example. We will stop takeovers that are waved through on the votes of speculators and hedge funds who flood in to buy shares once a takeover bid has been announced.

Because when that happens it can destroy great British companies and the good jobs that go with them.

One Nation Labour will also work with companies and workers to encourage a living wage across our country.

We also need to understand another big change in our economy.

That many new jobs in the future will come not from a small number of large businesses, but from a large number of small businesses.

So we need a new One Nation strategy for small business.

There are more than 3.5 million single person businesses in Britain right now.

People with new skills and new ideas starting out.

Trying to make a difference.

Like many of you here today.

These small businesses need a government that is on their side.

A government willing to take on the vested interests, wherever they find them, in the private or the public sector.

One Nation Labour will be that government.

That’s why it is One Nation Labour that is leading the way on banking reform.

Following Labour’s call last year for real separation between casino and high street banking, the Chancellor has moved.

But not far enough.

He still refuses to put in place a comprehensive power to split the banks by law.

We need that in legislation so if the banking system does not change its culture, we can break the banks up.

And new small businesses need something else too.

They need opportunities to work together.

So a One Nation Labour government would change the way Regional Growth funds work.

Because at the moment they all too often prioritise the interests of big businesses.

We’d make them work for small businesses across the country too.

So that we could find new ways for businesses to build shared facilities and develop deeper connections with each other.

Enabling them to start to overcome the challenges they face.

Finally, businesses and working people need a whole nation that supports them.

In the 19th century, people argued for clean air and sanitation. That allowed people to move to the cities for work and the great new industries to prosper.

In the course of the 20th century, the school leaving age went from 11 at the beginning of the century to 16 by the end. This enabled people to do the jobs they couldn’t have dreamed of before and allowed Britain to compete on the global stage.

Now in the 21st century, we must remember those lessons.

Today, too often, Britain just leaves people on their own.

That means too many parents can’t work, even though they want to work because they can’t get the childcare they need.

Too many people have to drop out of work when their parents become old or ill, because they can’t get the social care they need.

Too many young people just don’t have enough money for a deposit on a first home. That is bad for them and bad for our economy because they can’t move to the jobs they need.

And too many businesses find they can’t succeed because we haven’t built the roads, rail and infrastructure that we need.

They all know that we can’t solve these problems on our own.

None of us on our own are going to build the roads we need, the railways we need, the housing we need.

It is only by acting together.

And that is the idea at the heart of a One Nation economy: that our recovery will be built by the many – by all of us working together – and not just by a few at the top.

And that is what we will fight for between now and the General Election.

There is a big choice that will dominate that election.

It is a choice between two different visions of our economy.

The Conservative vision of a race to the bottom in wages and skills, rewarding those at the very top but leaving everyone else squeezed as never before.

Or the One Nation Labour vision.

Our economy will only prosper when the vast majority of the people of this country prosper too.

When working families have confidence and security; when they can invest in their future; and when they can start businesses of their own.
Britain is at a fork in the road. We can carry on as we are: falling wages, low growth, failure to tackle the deficit.

Or Britain can take the path I have outlined: a recovery made by the many, tackling low growth and reducing the deficit, building not squeezing the middle, all of us playing our part in turning this economy around.

One Nation.

Not just a better way to live, but the only way to prosper.

It is how Britain has flourished in the past.

It is what the Labour government understood in 1945.

It’s what Harold MacMillan understood when he spoke here in Bedford more than half a century ago.

We can rebuild this country.

We can offer people hope.

We can make an economy that works for working people.

It’s a goal worth fighting for.

It’s what One Nation Labour will do.

  • Daniel Speight

    Is this the break from Blairism and ‘New’ Labour that many of us have waited two years for?

    • aracataca

      IMHO this confirms that the New Labour period of office is over.Different times = different approach.

      • John Reid

        So years of opposition await then

      • Daniel Speight

        It’s not a question of approach, it’s a question of right or wrong.

  • sarah warren

    This is not even a manifesto commitment – it’s an “aspiration”. It’s taken less than a couple of hours for this so-called policy to unravel.

  • http://twitter.com/KulganofCrydee Kulgan of Crydee

    I may be wrong as I am not an economist, just Joe Public, but those who would have been affected by the 10p tax rate are no longer affected due to the increase in the personal tax allowance. Happy to be proved wrong by somebody with greater knowledge.

    • MonkeyBot5000

      The 10p tax rate would apply to money earned above the personal allowance so it doesn’t matter where that is set. You still have an amount of money that was being taxed at 20% now being taxed at 10% so it would definitely help.

    • aracataca

      ‘those who would have been affected by the 10p tax rate are no longer affected due to the increase in the personal tax allowance’. All of them?

      • Hugh

        It seems so:

        “In 2007, the last year of the 10p tax rate, the personal allowance
        stood at £5,035. With the 10p band on top, basic rate tax started at
        £7,265. Uprated for inflation, that will be worth slightly under £9000
        in the tax year starting in 2013.
        In that same year, the personal allowance will stand at £9,440.
        Someone who would in 2007 have been paying only the 10p tax rate is
        today paying no tax at all.”

        http://www.newstatesman.com/economics/2013/02/browns-mistake-has-already-been-reversed

        • Dave Postles

          They will be paying Council tax from April and receiving reduced benefits and services – given with one hand and taken away with the other.

          • Hugh

            That doesn’t really alter the point being made does it? The same would be true if the 10% tax band had remained.

            It’s not a bad idea: I’ve no objection to a mansion tax, nor benefiting the lower paid through reducing tax. But it’s just another example by which, in their constant contempt for the electorate’s intelligence and obsession with spin, politicians effectively lie about what they’re actually proposing.

          • Dave Postles

            I’m afraid that I shall make the point ad infinitum because it needs to be repeated – this pure dissimulation by the LibDems deserves complete and utter rejection.

        • aracataca

          Obviously it’s the next tranche of tax payers up from the threshold that will benefit from the 10p tax rate. Labour isn’t going to mess with the personal allowance.

          • Hugh

            Yes, but they aren’t the people who were affected by the removal. That’s the whole point: this is a new tax break for the low paid; the references to ‘reversing Gordon’s removal of the 10% tax band’ are politics, not economics.

  • charles.ward

    Why not just raise the personal allowance rather than complicate the tax system further? Perhaps because a £2bn tax cut shared between 25 million people would be an increase in the personal allowance of just £400 and would be compared to the £3600 the coalition will have raised it by 2015.

    By my calculations the 10% band would only be £800 wide (about half size of the original 10% band). So Ed Miliband can’t even be said to be completely reversing Gordon Brown’s mistake.

    • Redshift1

      Well you could do that but the point is that there is a big gap between 0% income tax and 20% income tax, so people between those thresholds (relatively low earning workers) pay quite a mark up when compared to those on very low wages.

      I don’t see your problem. It’s a good proposal that benefits working people, and you’re only taxing 70k houses, half of which are 2nd homes anyway. It’ll put money in working people’s pockets.

    • Dave Postles

      The raising of the personal allowance will be to some extent nullified by the new element of Council tax which will be imposed from April and the reduction in benefits and services. Raising the threshold of tax allowance is a mere shibboleth.

    • Brumanuensis

      Probably because increases in the personal allowance are quite regressive:

      http://static.guim.co.uk/sys-images/Business/Pix/pictures/2012/3/9/1331297183077/IFS-tax-chart-007.jpg

      http://www.resolutionfoundation.org/media/media/downloads/PERSONAL_ALLOWANCE.pdf

      http://www.ifs.org.uk/publications/6045

      “The gain from increasing the personal allowance to £10,000 in 2012-13 (without changing the higher rate income tax threshold) would be £379 a year to each individual taxpayer aged under 65 with an annual income between £10,000 and £116,210. There are three groups of individuals who would not benefit: those aged 65 or over, who already have tax allowances exceeding £10,000 (other than those with incomes above around £29,000 who see their allowance reduced to the level of the allowance for those aged under 65); those who do not have incomes high enough to pay income tax anyway (more than a third of the adult population); and those who have the personal allowance fully withdrawn as their income exceeds £120,000. Those with incomes between £8,105 and £10,000 would see their income tax liabilities fall from less than £379 to zero. A gain of £379 is of course larger as a percentage of income to a low-income individual than someone with a higher income, although it is important to remember that the poorest third of adults do not benefit at all because their incomes are already below the personal allowance.

      But if we examine the distributional impact at the family level (which is normal for this sort of analysis, since we would expect at least some degree of income sharing within families) we get a different pattern to the one we might expect. This arises because two-earner couples, who tend to have higher family incomes, can benefit twice over from the increase in the personal allowance because both members of the couple would see their income tax liabilities fall by £379, meaning that they would gain £758 in total. Thus, the highest average cash gain occurs in the second-richest tenth of the income distribution (some of the richest tenth would not benefit because of the withdrawal of the personal allowance above £100,000, lowering the average gain for this group). As a percentage of income, the gain is roughly the same from just below the middle to just below the top of the income distribution, with the bottom and the very top gaining by less than this.

      To summarise, the common assertion that increasing the personal allowance is progressive is true if one considers the gains across individual income taxpayers. It is not true if one considers the gains across all families as relatively few of the poorest families contain a taxpayer and two-earner couples gain twice as much in cash terms as one-earner families”.

      • Hugh

        Doesn’t that mean the 10% rate is also “regressive”?

        • charles.ward

          Of course, and a 10% band is more regressive because the benefit is not targeted on the poorest to the same extent as with a hike in the personal allowance. When the coalition raised the personal allowance they also reduce the basic rate band so 40% and higher taxpayers didn’t benefit so the assumptions in the IFS report and graph from Brumanuensis are not valid.

          Brumanuensis does have a point about couples and single people, but that really can’t be helped unless you want to go back to joint taxation for couples. It also ignores the fact that couples with two incomes have additional costs above those of a single person so it is perhaps not fair to put them in a particular “richness” percentile purely by their joint income.

          • Brumanuensis

            “When the coalition raised the personal allowance they also reduce the basic rate band so 40% and higher taxpayers didn’t benefit so the assumptions in the IFS report and graph from Brumanuensis are not valid”.

            Those earning over £100,000 don’t benefit, but that’s factored into the calculations. Even if you reduce the basic rate – and the Resolution Foundation’s paper modelled what would happen if you cut it to £33,090 – the effect is still broadly regressive (see chart 10).

            “It also ignores the fact that couples with two incomes have additional costs above those of a single person so it is perhaps not fair to put them in a particular “richness” percentile purely by their joint income”.

            Well potentially, although I’m somewhat sceptical about that, but even if you break the figures down on a single / couple basis, the proportional increase in income (chart 3) is greater for a single earner with no children, than for a couple with no children. Equally, a couple with no children get an increase in household income that is twice that of a single earner with children, as well as greater than a couple with children. It seems a very strange way of recognising the greater costs incurred by couples.

            And of course, any latent progressiveness is strongly mitigated by the severe cuts in tax credits announced in the past two budgets, as well as the absurd changes to council tax benefit coming into force this April.

        • Brumanuensis

          Potentially, I know the IFS were in favour of getting rid of it. We’ll have to see exactly how it’s intended to be structured first.

  • charles.ward
    • Redshift1

      It’s essentially the same groups of people that benefit (low income workers). Either proposal would be a good thing.

      • Hugh

        That’s okay, then, we can just chalk up every policy to benefit low earners to the mansion tax.

        • Redshift1

          He isn’t in power. He’s making clear priorities and that is to help working people who are struggling (unlike the present government). Circumstances can change, so who knows what exactly will be the best way to benefit those groups come 2015. Clearly, he can only spend it once and he’ll have to decide before putting it in a manifesto, but that’s for two years time.

          • Hugh

            I thought policy pledges were about telling people what you would do if in power. Why bother to cost it at all, otherwise.

          • Redshift1

            If you were in government 10 years ago or 10 years in the future, would they be exactly the same as they would be if you were in government today? In the Q&A after the speech what they made clear is that this is something they are pushing for now, that is affordable now and that could be (although since it wouldn’t benefit his mates, doubt Osborne will do this) in this budget.

  • http://twitter.com/citizen_colin Colin McCulloch

    It’s now or never for us – hopefully the manifesto will have the policies needed to eradicate the Tories once and for all.

  • Monkey_Bach

    I wonder what Tony Blair, with his six or more luxurious homes, thinks about the Mansion Tax! It would be nice to see him doing something constructive for the poor albeit by means of involuntary contribution. Heh-heh. Thanks, Tone. Eeek.

    • MonkeyBot5000

      Don’t worry, I’m sure they’ll all be owned by one or another of his numerous offshore companies.

    • MonkeyBot5000

      Don’t worry, I’m sure they’ll all be owned by one or another of his numerous offshore companies.

  • MrSauce

    Partly stupid (adding extra complication to the tax system) and possibly unworkable (mansion tax).

    So I am partly stunned by the idiocy, and partly pleased: at least it confirms that I was right in thinking that there needs to be a proper clear-out at the top of the Party.

    Also, great comedy value in Milliband mis-attributing the invention of the steam railway to Stevenson rather than Trevithick. But I guess you had to be there…

  • http://www.facebook.com/people/Andrew-Chandler/100000059028926 Andrew Chandler

    Definite policy development, but disappointed by the unnecessary personal attack on Gordon Brown’s legacy as Chancellor. Given the incompetence of the present Chancellor, this was a mistake. I’m sure Ed Balls can do a better job than Osborne, but we’ll have to see if he can raise the money to deliver this policy with a shrunken economy, or indeed that Ed Miliband can do better than Brown as PM. Cheap swipes at the past are one thing, but we need to convince voters that we can deliver in Government, bz working better as a team this time. Getting David Miliband back would be a start in this process.

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  • Comment Attracting the anti-UKIP vote – why Clacton matters for Labour

    Attracting the anti-UKIP vote – why Clacton matters for Labour

    Make yourself a cuppa, pull up a comfy chair, and watch. Since Douglas Carswell’s surprise/no-surprise defection to UKIP yesterday and the forcing of a by-election in Clacton, there will be some in the party tempted to adopt this attitude. And not without good reason. Consider the previous by-election outings over the last year or so. In Eastleigh, a Liberal Democrat/Tory marginal, from nowhere, became a LD/UKIP marginal. The Conservatives were dumped into third place and our vote stagnated at just […]

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