David Miliband adopts Lib Dem mansion tax policy

The Guardian reports today:

Owners of homes worth more than £2m should pay an annual “mansion tax” to help the poor, Labour leadership contender David Miliband said today. The shadow foreign secretary said the levy would raise £1.7bn to restore housing benefit for the least well-off.

The proposal – outlined in an interview with the Evening Standard – appears designed to drive a wedge between the coalition partners, as well as appealing to Labour grassroots.

Business secretary, Vince Cable, put the idea in the Liberal Democrat general election manifesto – but it was lost during negotiations with the Tories. Under the plan, owners would have to pay a 1% levy on a property’s value above £2m.

Actually Mr Miliband has many times said he supports the mansion tax, including in The Guardian six weeks ago: “We should not be afraid of a mansion tax on £2m houses”. His support is at variance with Labour’s response at the time, with Exchequer Secretary to the Treasury Sarah McCarthy-Fry denouncing the proposal as a “muddle [that] is typical of the Lib Dems”.

The mansion tax of course remains Lib Dem policy – a fact missed today by the Daily Mail which inaccurately suggests “it was dropped before the election following an internal party revolt.” Erm, not exactly. Good old Daily Fail.

The attraction of the idea for Mr Miliband is clear. It not only positions him slightly to the centre-left at a time when his brother, Ed, is actively courting the second preferences of Ed Balls and Diane Abbott, also both seen as candidates of the left (somewhat ludicrously in Mr Balls’ case). But it also seeks to drive a wedge between the Lib Dems and the Conservatives, who demanded the policy be dropped during the coalition negotiations.

In the longer-term, of course, Mr Miliband’s strategy is clear enough: to occupy the progressive centre of British politics, with the simultaneous aim of weakening the Coalition partnership in Parliament and appealing to disaffected Lib Dem voters in the country.

The strategy is easy to identify. The question for Lib Dems is how we deal with it.

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  • Matthew Huntbach 3rd Aug '10 - 11:26am

    The way this was covered in the Evening Standard yesterday indicates the difficulties we face in fighting for a more just society when we have a printedmedisa most of which is run as dedicated propaganda on behalf of the super-rich.

    The “mansion tax” was covered, as it has been before, as if it was some massive blow for Londoners or “voters in the south”. That is rubbish piled upon rubbish. It is something of a blow for a TINY number of people, most of whom would be mildly inconvenienced for it. For most Londoners and southerners howver, it is a hugely beneficial thing – what ordinary people in the south need is property price inflation reversed so that housing becomes affordable. How much misery is caused by high house prices, how many of our social probelms come down to families being poorly housed? And yet papers like theEvening Standard think the interests of the few thousand who would have to pay this tax are more important than the interest of the millions placed into misery here in London and the south by impossible to afford housing – pumped up to inflated prices because the taxation regime means this is the best way to pump money as an “investment” rather than into anything productive.

    I myself live in a house in London, within easy travelling distance of the centre, large enough for a family, and yet if it were sold it would even with today’s inflated house prices go for not much more than a tenth of the level at which this “mansion tax” is proposed to come in. As it is only the saleable price above that level that gets taxed, most of those hit by the taxation would pay tiny amounts because most would only be marginally above it.

    The Standard had the cheek to suggest the “mansion tax” was wrong because London house prices are “irrational”, without noting that the lack of such a tax is a big part of why they have become so irrational. Our economy is currently in a crisis state to a large extent because of a loop invilving puffing up house prices and puffing up mortgage lending to pay for them. If we had a decent thoughtful media which published commentary which was in the interest of ordinary people, this would be what they are saying. Instead, we have editorials aimed to make those who are in the middle identify with the interest of the idle super-rich who make money just by being rich rather than by the work ordinary people have to do to make money. They do this by such thing as suggesting the “mansion tax” is a blow top people in teh siuth rather than the truth, that it woudl be a boon.

    We are led by the likes of the Standard to weep tears for those who brought London property years ago and have seen a massive rise in the price it can be sold at when such people are asked to pay a small tax on that. I have no tears for such people – they can easily wrap up the tax in equity swap, so it will just mean a slightly smaler dollop of cash for their heirs. Where are the tears for those who cannot afford to buy any house – millions of Londoners and southerners? Even my small house would be unaffordable for someone on the median London income.

    Having a house of one’s own makes a big difference to one’s liberty, and the way ot can be done is to tax property much more highly than is done now balanced by needs-based tax allowances. This will end housing being left empty as effectively gambling chits, and lead those who have big money to gamble to at least put it into gambles whcih might be more productive such as financing enterprise. Higher tax on property means we would have to make less cuts in public service, or could reduce income tax or “tax on jobs” as the Tories called it until their masters whistled and told them tax on jobs is better than tax on the idle rich.

  • Robert Heale 3rd Aug '10 - 11:49am

    I totally agree with the logic and rationale of Matthew’s comments about the so-called “Mansion Tax”,

  • @ Mathew Huntbach

    Couldn’t agree with you more. It is depressing that so much of our political consciousness is dominated and influenced by a few right wing, self interested journalists whose objective is to convince the masses that their natural reference group is a minority of super rich whose financial interests are the only ones which serve theirs. I was probably going to vote for David Miliband anyway. His proposed adoption of the Mansion Tax has certainly firmed up my vote for him. What a shame that Vince Cable didn’t have the strength of conviction to insist that the Mansion Tax policy be included in the Orange and Blue Tories’ coalition agreement.

  • MacK – why spoil a sensible comment with a silly aside? Do you seriously think the only reason the Tories wouldnt give way on the Mansion Tax was because Vince Cable didn’t have enough conviction? Honestly.

  • Liberal Eye 3rd Aug '10 - 12:47pm

    On the Mansion Tax in particular – well said Matthew.

    On the more general point of countering the Miliband strategy to occupy the progressive centre of politics we need to rethink how we approach policy. Our core vote remains smaller than that of the other parties because 20+ years after the party was formed with a supposedly logical policy-making process our core narrative remains remarkably fuzzy. ‘Fair’ is hardly a USP – the other parties believe in their own versions of it – and we have negligently relied on the continued awfulness of the other parties to deliver a large and consistent protest vote of the disaffected from both sides. This protest vote is useful but we should not count on it. Is recent opionion poll weakness due to the Labour-leaning part of it draining away?

    If a small army is to defeat a larger one it must first ensure that it is as fighting fit as possible. In politics this means that a coherent narrative is essential – in particular about power and money and how they should be managed for the public good. This is not easily done; the last paradigm shift was brought in by Thatcher 30 years ago and subsequently adopted with minor amendments by Labour.

    It has led us to ruin so it would be nice to think that the Lib Dems were ready, waiting for the moment to strike with a new paradigm. But the leadership has never really provided, well … leadership. Instead policy-making has too often been guided by opinion polls and by what the majority in the Party prefer to discuss rather than strategically-important topics. Too often the underlying question has been, “What can we say that will get some votes?” and not, “What does the country need?”. This is bad marketing and bad politics. It is politics as a solution to the politician’s problem (how to get elected) and not to the voters’ proble (how to make a better country).

    As the old adage says, “Build a better mousetrap and the world will beat a path to your door.” We need the political equivalent.

  • The Lib Dems had enough conviction to argue for a regressive income tax cut… From a package that included the mansion tax we were meant to believe couldn’t be broken up… (“Yes the income tax cut is regressive, but you can’t judge it out of context! It’s part of a package, maaan!”)

  • Andrew Duffield 3rd Aug '10 - 1:18pm

    Perfect opportunity for Lib Dems to now go one hundred times better than any mansion tax ‘muddle’ with a genuinely progressive tax on residential site values – by simply extending our policy for business rates to domestic land as well, raising the income tax threshold further and reversing the VAT rise as the quid pro quo.
    C’mon Vince, you know it makes sense!

  • The (Lib Dem) mansion tax was a good idea before the election and it remains a good idea now. It’s a pity that it didn’t withstand the formation of the coalition. The difficulty with the advocacy switching to Labour is that it is easier to dismiss it as class war, rather than a sensible policy to take some of the heat out of the housing market, which would affect relatively few people, who could certainly afford it. Taxing unearned and unproductive capital gains is the least painful way to raise revenue.

    @Liberal Eye makes some very important points about narrative. If the Coalition era has done one thing it has demonstrated the importance of a strong narrative, including the well-crafted one liner (if I hear another government minister say ‘for every four pounds we’re spending we’re borrowing a pound’ I’ll scream).

    The Coalition has been able to push a very radical agenda on the back of a narrative of urgent action in the face of impending economic Armageddon, even though the state of the public finances would withstand several alternative readings – most of which don’t imply the double decimation of the state.

    But identifying a unity of purpose and values that would need to underpin such a narrative is a huge challenge (especially in such a broad church as the Lib Dems). That’s of course why we default to words like ‘fairness’ which everyone can say Amen to, even though they mean something completely different when agreeing to it.

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