One Nation Labour and Ed Miliband’s message of hope

February 14, 2013 2:36 pm

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Knocking doors in Eastleigh yesterday I had a conversation that will be familiar to Labour activists right across the country. It began with the dreaded phrase “You’re all the same” and ended, more in sorrow than in anger, with the cutting charge that Labour stopped standing up for ordinary people in Britain.

The man in question was a wage-earner in his late forties, with a mortgage to pay, a child still in school and another at university.  His wife works part-time on the tills at a local supermarket.  He was worried about making ends meet, concerned that their combined earnings are barely enough to live on at present, as rising fuel and food bills outstrip the minimal increases in wages that they’ve had in recent years, and worried, too, that their pensions would be too small to live on in retirement.  Most poignantly, he expressed his frustration and anger that the prospects for his children looked worse than his did at their age.

He is a Labour voter by instinct and tradition who sees our party as the natural home for working men and women, but his faith in our party was rocked during the last Labour government when he felt our language, our policies and our principles became decoupled from our roots and from the realities of ordinary people’s lives. It’s a very tough message for us to hear, and tempting to respond with a litany of Labour policies which supported and shielded working people: the minimum wage, tax credits, universal benefits, investment in schools and hospitals. But that list would not shift this voter’s conviction that the future looks less comfortable than the past, or that the last Labour Government did too little tackle the crisis in living standards, or that the current Tory-Led Government is compounding the error with catastrophic effects.

And he’s right, of course. As Ed Miliband made plain today in his important Bedford address:

“(Labour) made a difference. But it wasn’t enough. And the problem now is that things are getting worse not better…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.”

We made a difference, but for millions in Britain – more a squeezed majority, than a squeezed middle – progress and prosperity have ground to a halt. And that stagnation cannot be defended or justified when productivity and output has generated increased wealth – but only for a lucky few.

As Ed spelled out:

“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% of earners.”

That distribution of our common wealth is unjust and unsustainable and the trickle-down justification of its alleged efficiency stands exposed as self-serving and broken. The challenge for this generation of politicians is not to defend the past, but to find policy solutions which deliver future jobs and opportunities, wealth and social justice, and more equally right across our society – solutions that deliver a fair deal for the many not just riches for the few.

Labour, led by Ed Miliband, is facing up to that challenge and today’s announcement that we want to re-introduce a 10p tax rate, is just part – though an important part – of our message of hope to ordinary people in Britain.

In practical terms, correcting the mistake on the 10p rate would benefit 25 million basic rate tax payers in Britain, 1.2 million of them in Wales alone. The precise amount would depend on how much we raise from a new tax on properties worth more than £2 million, but each of those 25 million could benefit by up to £100 a year –much less than the £100,000 set to go to millionaires under this rotten government, perhaps, but a clear statement of the different values of Ed Miliband’s Labour Party. Through this fairer allocation of our nation’s resources,  we are asking those with the broadest shoulders to bear the biggest load once more.

Only with practical and just measures like these will we prove once more that politicians are not all the same, that there were alternative, more just, decisions that the coalition might have undertaken in the last three years and that a One Nation Labour Government will speak decisively for the interests of the squeezed majority over the privileged minority. If we do that we can rebuild trust in politics and faith in Labour. Maybe even in Eastleigh.

Owen Smith is Shadow Secretary of State for Wales

  • Daniel Speight

    It’s a start in repairing the damage done by New Labour, but there must be more than just the 10p rate.

    • Dave Postles

      Exactly.

  • charles.ward

    So presumably you are not going to reverse the cuts to tax credits now (as this was going to be funded by the mansion tax).

    • jaime taurosangastre candelas

      It is going to be very expensive, this mansion tax, what with having to pay for tax cuts for 25 million people. Perhaps the tax cuts generated for those 25 million will in reality turn out to be pennies, and thus the whole idea a lot of nonsense.

      I’m also wondering about the law, and principles, and not the practice of taxing expensive houses (who values, frequency of valuation, etc, what is the worth of a very big London house if a rich man “gifts” it to his children, for a nominal £10, etc). Someone has a house “worth” £1,999,000 because that is what he bought it for last month, and the next door neighbour has a slightly bigger and smarter house, but it is not for sale, and so worth nothing. And now the non-selling neighbour has a tax bill because the old neighbour made a good sale? To say nothing of the confused elderly gentleman next house down, who lives in a house but does not know what it is worth (as he is not selling it, nor particularly compose mentis, and has to be told that it is January and needs to fill in his self-assessment return.

      It all appears to be a nonsense, and the practical application wide open to challenge.

      • JoeDM

        All very good points and indicate the problems associated with taxing the value of an asset.

        The classic example is the pensioner who lives in the old family home in a nice part of central London who is cash poor and unable to pay the new tax. Are Labour going to pass a law to force her out of her house?

        • jaime taurosangastre candelas

          Really not such a “message of hope”, as opposed to a message of “I have not got a bloody clue, and so will publish all sorts of nonsense” .You would expect more of someone who wishes to be our Prime Minister.

        • Dave Postles

          It’s piffle – did you not live under the old rating system for funding local government until Thatcher destroyed it? The only problem was the refusal of successive governments to implement the five-year revaluations. The rest is just a matter of allowances. Please do not confuse the avoidance of stamp duty on sales with the independent valuation of property.

          • jaime taurosangastre candelas

            Government is not very good at valuing things (that is what markets are for), and so a tax based on government assessed values are inefficient. How is government supposed to mensurate dynamic values over time?

            To take two examples. I write some poetry in Spanish, and sell it (this does not happen frequently, as my poetry only occasionally is sellable). Last year, I made about £1,500 from it, which was paid for into my Chilean account by a Chilean publisher. It might have been worth only £15, or maybe £15,000. It depends on how the buyer values it, and I have no input to that decision. I have not paid British tax upon it, despite having the idea and doing the writing here in the UK. My sister has a new design for for some little small ribs on the winglets now common on aircraft, that is the product of her engineering knowledge (she being a Chilean citizen, employed by a Brazilian-owned company in Santiago that itself is a subsidiary of EADS in France, the computation and mathematical proofs of her idea being done in France, and a patent registered in the UK because our British law and patents are the most accepted internationally), and I did the writing-up and engineering drawings for her patent application for a 10% assignation. If this idea is valuable, to whom and where is the tax payable, and even should it be?

            Houses are only worth what someone is prepared to pay for them, and if not for sale, worth nothing. So trying to tax a house on a potential value is “a hiding to nothing”. Yes, we can all agree that there should be a value, but what is the precise value, when I want to sell it cheaply to avoid a tax, and you want to sell it expensively because it is your inheritance, and our brother does not wish to sell it at all, and there is disagreement between us. Goodness, this is territory ripe for great, and expensive legal argument.

          • Dave Postles

            Valuations are made of properties every day by estate agents. Business rates are exacted on exactly the same criterion. If you do not wish to have the property valued by a valuation office, it can be subcontracted to an independent group of estate agents. What you consider to be its value and what is an independent assessment of its value are two entirely different matters. The old RV system precisely took account of the market by examining the annual rental valuation of a property. Estate agents take account of the market every day. The other points which you make are irrelevant, more the subject of inheritance tax (if the property is valued at more than £325k) which will determine whether the house is sold or retained. Inter-familial differences of opinion do not affect the valuation of the property for someone to pay.

          • JoeDM

            None of the above address the problem of the asset rich but cash poor OAP.

          • Dave Postles

            You obviously missed my reference to allowances in a previous response (not on this thread). Personally, I am already in the position of being cash poor with a poor estate too. We have some options: (i) downsize soon – which depends on my wife’s health; (ii) I predecease her and she will likely take out some equity release to cover her costs; (iii) she predeceases me and I sell up and move to a cheap terrace house in Burnley where I can see the moors. The OAP is fortunate indeed if s/he has lived in the same house as a ‘family home’ for a long time. For my modest house (well below the threshold for inheritance tax), I have moved accommodation six times, so that I do not regard it as a ‘family home’ – indeed, even then I have commuted to work, so it often seemed more like a b&b. Your example is a human problem, but also technically resolvable. I’ve never seen you express any sorrow for the people likely to be displaced from rented accommodation in the capital, but I may be mistaken.

          • Dave Postles

            See below.

          • jaime taurosangastre candelas

            It will be unworkable, this mansion tax.

            If the taxman asserts that a property is “worth” some value that he thinks it is, offer it for sale and require him to buy it. It is the only proof of his assertion, that he is prepared to put his hand in his pocket. If he is not, then by definition the house is not worth the sum he asserts.

            The taxman will probably stop this stupid mansion tax after the first seller takes his £2 million and pays his £20,000 tax. Whatever else he is, the taxman is not foolish, unlike this unworkable policy.

          • Dave Postles

            That’s ok. We’ll wait until the next transfer of the property when it is registered at the Central land Registry or when it is inherited and an assessment made. Only you could imagine that estate agents could be bought and not lose their membership of Chartered Institute.

          • jaime taurosangastre candelas

            The very rich – those with the £2million houses – will not find that hard to avoid. Of course, they should not, but they will.

            So, you divide the ownership of your house among your family, and

          • Dave Postles

            Dream on. The cost-benefit analysis and the opportunity cost are the practical considerations. Nondom status would involve the nondom annual charge, ignominy, adverse publicity, and emotional losses. The consequences would most likely be minimal for the Exchequer. There are downsides to amalgamating the property into the company’s portfolio too. No doubt you will concoct some other abstract possibility – go ahead and have the last word.

          • jaime taurosangastre candelas

            “Hmmm”. We will see. I have great doubts that this tax will be workable, as there are so many technicalities to be addressed, and the cost of collection from what is planned to be a small number of properties will probably make it not worthwhile. These rich people have ready access to accountants and lawyers, so the collection cost will be higher than for any normal tax.

            “The numbers” do not seem to work, either. To benefit 25 million taxpayers with a tax cut of even £100 each would require revenue of £2.5 billion to be raised, each year. I don’t know how many mansions there are in the UK worth over £2 million (and nor does the taxman, and he will have to spend a lot of money “upfront” to find out), but there would have to be 125,000 to make this even notionally cost neutral if the proposed charge is £20,000 for a £2 million property. And I suspect more like 250,000 to make it cost neutral if the costs of collection are included.

            Assuming 250,000 over £2million houses in a nation of 30 million private dwellings, and an average price per dwelling of £180,000 seems a bit unrealistic.

            Much easier for Government to offer 25 million taxpayers a saving of £50 each per year “for free”, not to bother with a complex and legally unclear tax on mansions, and to put another £1.25 billion onto the national credit card, and as a bonus not “frighten the horses” of the rich people with another tax.

            But Ed seizing an opportunity to place the Lib Dems and tories against each other is quite good fun, and probably will be productive, in political terms. However, if he is challenged on “the details”, he’ll quickly start to look a bit stupid when it all “unravels”.

          • http://www.facebook.com/people/Mike-Homfray/510980099 Mike Homfray

            You’d better tell your mates in the FibDems. They support it too. Mind you, as you don’t support any sort of progressive taxation, my reaction to your complaints tends to be ‘same old same old’

  • Quiet_Sceptic

    Well £100 a year is better than nothing but voters are not fools and next to many of the changes we’ve seen over the last few years it’s little more than crumbs.

    Take your voter with his child at uni, perhaps now faced with £9k/year in tuition fees, looking at emerging with a debt of up to £40k whereas previous generations emerged largely debt free, the poorest on full grant. £100/year is nothing, it’s not even 1 months interest. He’s probably worrying about whether his child will ever get on the housing ladder – house prices trebled since 1997, £100 is nothing next to the soaring cost of housing.

    It’s a step in the right direction but it’s small step up on an escalator traveling downward.

  • Quiet_Sceptic

    Well £100 a year is better than nothing but voters are not fools and next to many of the changes we’ve seen over the last few years it’s little more than crumbs.

    Take your voter with his child at uni, perhaps now faced with £9k/year in tuition fees, looking at emerging with a debt of up to £40k whereas previous generations emerged largely debt free, the poorest on full grant. £100/year is nothing, it’s not even 1 months interest. He’s probably worrying about whether his child will ever get on the housing ladder – house prices trebled since 1997, £100 is nothing next to the soaring cost of housing.

    It’s a step in the right direction but it’s small step up on an escalator traveling downward.

  • robertcp

    I would prefer Labour to concentrate on raising the personal allowance rather than a 10p rate or tax credits, which must be a nightmare to claim.

    • http://www.facebook.com/people/Mike-Homfray/510980099 Mike Homfray

      A 10p rate is very simple

  • robertcp

    I would prefer Labour to concentrate on raising the personal allowance rather than a 10p rate or tax credits, which must be a nightmare to claim.

  • sujit bikash chakma

    nice blog and I also think so. thanks

  • MrSauce

    It is a shame that the our politicians are chiefly concerned with finding new ways to leach more money out of taxpayers. We’ve hit the buffers on income taxes, so let’s look for ways to tax ‘wealth’. Try doing something useful with the tax revenue we give you.

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