Labour is 'thinking the unthinkable' on tax cuts

LABOUR'S Social Justice Commission, set up to redesign the welfare state, may advocate reducing income tax, in a radical departure from party policy at the last election.

Instead of increasing income tax, as Labour then intended, the commission is examining the possibility of raising the threshold at which income tax is paid and increasing taxes on 'resource use' such as roads. Taxes would also be imposed on consumers and companies causing pollution and environmental damage.

The ideas are being debated within the commission, which was appointed by John Smith, the Labour leader, in January to 'think the unthinkable' about the future of the welfare state.

They are likely to produce a clash with the party's more traditional view, which will be advocated this week on the eve of his union's annual conference by Bill Morris, leader of the Transport & General Workers' Union, when he calls for sharp rises in income tax for those earning more than pounds 50,000.

The commission is also investigating the feasibility of integrating the tax and benefit systems. If a merger is not practical, other fundamental changes are inevitable, according to Patricia Hewitt, the commission's deputy chair, who was policy co-ordinator to the former Labour leader Neil Kinnock.

Ms Hewitt said: 'Under the present system people are taxed into poverty and forced on to benefits to supplement their wages.

'The commission is working on plans to raise the threshold at which income tax is paid. The benefits system would also be changed so that people who take low-paid or part-time jobs - or their partners - do not lose benefits. This would provide unemployed people and those on low incomes with an incentive to work to raise themselves out of the poverty trap.'

Although the commission has not drawn up firm proposals, Ms Hewitt said she had already concluded that the present tax and benefit systems must be changed to achieve greater social justice.

The commission's views are the first indication of the left's thinking on how to reduce the spiralling social security budget - pounds 80bn this year - and reduce the budget deficit, which is projected at pounds 50bn.

The commission's plans will be presented as a radical alternative to the Government's proposals for cutting benefits and increasing taxes, such as VAT on fuel, which hit the poor hardest. They also differ widely from the sweeping reforms being considered by Peter Lilley, Secretary of State for Social Security, who announced earlier this month 'cautious propositions' for giving benefits to fewer people and encouraging people others to opt out of state benefits.

The commission's draft proposals are likely to be published later this year and refined into recommendations by summer 1994. They are likely to be adopted as Labour Party policy.

Run under the auspices of the Institute of Public Policy Research, a left-of- centre think-tank, the commission is chaired by Sir Gordon Borrie, former director general of the Office of Fair Trading. Its remit is to define social injustice and its causes, from poverty to unemploymentIts first two reports will be published this month. One, called 'The Justice Gap', analyses the distribution of wealth and income and shows two-thirds of the population live in households with earnings below the average pounds 14,600 after tax.

The clearest Tory attempt since the election to align the party with the European Christian Democrats was made yesterday by David Hunt, Secretary of State for Employment, writes Donald Macintyre.

He staked his claim as a senior spokesman for the pro-European, left-of-centre wing of the party, by rejecting Labour claims that the Conservatives stand only for laissez-faire individualism.

Mr Hunt told a Tory Reform Group conference in Oxford that Conservatives were united by their belief in decentralisation and individual responsibility, and in 'rejection of the socialist nightmare'. But he insisted: 'Companies should take responsibility for the welfare of their employees and for the wider social consequences of their activities.'

In terms which will antagonise Thatcherite, anti-European Tories, he envisaged 'the unions between the peoples of Europe' growing 'ever closer, inch by questioning inch'.

(Photograph omitted)

News
people And here is why...
News
people
News
peopleStella McCartney apologises over controversial Instagram picture
Arts and Entertainment
Hayley Williams performs with Paramore in New York
musicParamore singer says 'Steal Your Girl' is itself stolen from a New Found Glory hit
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
News
William Hague
people... when he called Hague the county's greatest
Extras
indybestKeep extra warm this year with our 10 best bedspreads
Life and Style
health
News
i100
News
people
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Associate Recrutiment Consultant

£18000 - £23000 per annum + Uncapped OTE: SThree: SThree Group have been well ...

Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE: SThree: Real Staffing Group is seeking Traine...

Year 6 Teacher (interventions)

£120 - £140 per day: Randstad Education Leeds: We have an exciting opportunity...

PMLD Teacher

Competitive: Randstad Education Manchester: SEN Teacher urgently required for ...

Day In a Page

Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

The children orphaned by Ebola...

... then rejected by surviving relatives over fear of infection
Pride: Are censors pandering to homophobia?

Are censors pandering to homophobia?

US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
The magic of roundabouts

Lords of the rings

Just who are the Roundabout Appreciation Society?
Why do we like making lists?

Notes to self: Why do we like making lists?

Well it was good enough for Ancient Egyptians and Picasso...
Hong Kong protests: A good time to open a new restaurant?

A good time to open a new restaurant in Hong Kong?

As pro-democracy demonstrators hold firm, chef Rowley Leigh, who's in the city to open a new restaurant, says you couldn't hope to meet a nicer bunch
Paris Fashion Week: Karl Lagerfeld leads a feminist riot on 'Boulevard Chanel'

Paris Fashion Week

Lagerfeld leads a feminist riot on 'Boulevard Chanel'
Bruce Chatwin's Wales: One of the finest one-day walks in Britain

Simon Calder discovers Bruce Chatwin's Wales

One of the finest one-day walks you could hope for - in Britain
10 best children's nightwear

10 best children's nightwear

Make sure the kids stay cosy on cooler autumn nights in this selection of pjs, onesies and nighties
Manchester City vs Roma: Five things we learnt from City’s draw at the Etihad

Manchester City vs Roma

Five things we learnt from City’s Champions League draw at the Etihad
Martin Hardy: Mike Ashley must act now and end the Alan Pardew reign

Trouble on the Tyne

Ashley must act now and end Pardew's reign at Newcastle, says Martin Hardy
Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

Isis an hour away from Baghdad -

and with no sign of Iraq army being able to make a successful counter-attack
Turner Prize 2014 is frustratingly timid

Turner Prize 2014 is frustratingly timid

The exhibition nods to rich and potentially brilliant ideas, but steps back
Last chance to see: Half the world’s animals have disappeared over the last 40 years

Last chance to see...

The Earth’s animal wildlife population has halved in 40 years
So here's why teenagers are always grumpy - and it's not what you think

Truth behind teens' grumpiness

Early school hours mess with their biological clocks
Why can no one stop hackers putting celebrities' private photos online?

Hacked photos: the third wave

Why can no one stop hackers putting celebrities' private photos online?