Yesterday, Ed Miliband gave the One Nation Labour project a greater level of clarity in a landmark speech revealing some of it’s policies in relation to the tax system. Symbolically, the speech was delivered in Bedford, the town in which the Conservative Prime Minister Harold Macmillan made his oft-quoted comment that the British pubic had “never had it so good” half a century ago. The contrast being with the falling living standards we see today.
Indeed, forecasts and data released early this week show that a low-middle income household has seen its spending power reduced to 2003 levels, and is going to fall to 1996 levels by the end of this Parliament. Even with wildly optimistic growth forecasts, the people will be worse off, and this shows something seriously wrong with the distribution of wealth in our economy. At last, Miliband has recognised this, conceding that while New Labour introduced valuable reforms (such as tax credits, the Minimum Wage, and SureStart), they failed to do enough to give the workers their fair share in the growing prosperity that was being concentrated in the hands of the few. So often, I will approve of a Labour politician’s analysis of an issue the grounds that, whist it is unsatisfactorily cautious, it is a step forward. For once, I can be in 100% agreement with Ed Miliband.
The unbalanced distribution of wealth in an economy is a problem that takes a series of major reforms to alter, as in 1945-51 and 1980-1992. But Miliband’s redistributive measures are a good starting point. A Mansion Tax of 1% of the value of properties worth over £2 million will fund the reinstatement of the 10p tax band which Gordon Brown so controversially abolished in 2007. Here we have a classic, Robin Hood style progressive transfer of wealth. And yes, I reject the criticism from the rightwing think tank, the Institute for Fiscal Studies, that raising the tax threshold would be a simpler means of achieving a similar aim: Labour values include that of all contributing to the common good. I’d sooner raise the Minimum Wage system and lift people into the Income Tax system. All workers on a Living Wage should have a stake, no matter how small, in the tax system. Otherwise we end up with an American system in which there is little support for helping the disadvantaged.
But this redistribution would be accompanied by stimulus to give this fairer economy a boost to make a growth a reality. A VAT “holiday” would be useful, provided the cut was 5% rather than the token 2.5% temporary cut under Alastair Darling. To complement this, we have been promised “action” to reduce train fares. If you refer back to my earlier posts, such as A New Deal for Modern Times, you will conclude, as I have, that I am now the author of several Labour policies.
How long until we can get EM into Downing Street? Two years is far too long.