On a day of political anniversaries (50 years since Harold Wilson’s election as Labour Leader), Ed Miliband chose yesterday to go to the scene of Harold MacMillan’s famous “You’ve never had it so good” quip to give some sort of sighter of Labour’s economic strategy for the next Westminster elections.
Miliband’s own version of that phrase isn’t quite the more snappy title of this post, but the more wordy “Far from feeling they have never had it so good, millions across Britain today fear they will never have it so good again”. This suggests that Labour will fight on the issue of falling living standards. In theory asking the question “Are you better off now than you were five years ago?” should solicit a negative response for the current government. Yet polling suggests that Cameron & Co’s disastrous handling of the economy is more trusted than Milliband & Balls. Oddly Balls gets an awful lot of the blame for the last government despite holding that key economic post of… Education Minister.
As I’ve pointed out previously, one of the things that will make a Milliband premiership unlikely is the amount of time gifted to the Tories in spinning their version of events unchecked. This is probably why Milliband & Balls are crafting policies that lack any radical departure from austerity. The majority of these policies will not be seen for at least 18 months or so, but yesterday Miliband unveiled two policies that fit into the strange narrative of One Nation Labourism.
Firstly Milliband, and lets be honest here, has squarely parked his tanks on the Lib Dem’s lawn by pilfering their plans for a Mansion Tax. Labour’s plans would be administered on properties worth more than £2 million. Money raised here proposed to be used to fund the reintroduction of the 10p tax rate.
While Labour’s attempt to highlight the low paid is good news, there is one problem here. Thanks to the Lib Dem policy of raising the tax threshold (which was £5,225.00 in 2007 and is now £8,105.00) the introduction of a 10p low rate of tax will act as a tax increase for many people at a time when incomes are still being squeezed. If Labour were looking for policies that would help the low paid, a continuation of the policy of raising the tax threshold would be a viable alternative.
While lowering VAT would lower prices, raising the tax threshold would put money back into the pockets of the low paid. There is also the added bonus that the low paid also tend to buy goods with duty and VAT applied, which would bring money back into the treasury. Cutting taxes at the bottom would also be a much more effective way of putting some liquidity into the economy. I would hope that after two years in opposition, there are better ideas to come than reinstating a tax band that is now obsolete.