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)

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
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

Recruitment Genius: Magento Front End Web Developer

£25000 - £35000 per annum: Recruitment Genius: A Front End Web Developer is re...

Investigo: management accountant

£250 - £300 per day: Investigo: Growing international marketing business requi...

Recruitment Genius: ORM / Online Reputational Consultant

£18000 - £22000 per annum: Recruitment Genius: An ORM Consultant is required t...

Recruitment Genius: Facilities Manager

£21000 - £25000 per annum: Recruitment Genius: This leading provider of educat...

Day In a Page

Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

Greece elections

In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

Holocaust Memorial Day

Nazi victims remembered as spectre of prejudice reappears over Europe
Fortitude and the Arctic attraction: Our fascination with the last great wilderness

Magnetic north

The Arctic has always exerted a pull, from Greek myth to new thriller Fortitude. Gerard Gilbert considers what's behind our fascination with the last great wilderness
Homeless Veterans appeal: Homeless in Wales can find inspiration from Daniel’s story

Homeless Veterans appeal

Homeless in Wales can find inspiration from Daniel’s story
Front National family feud? Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks

Front National family feud?

Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks
Pot of gold: tasting the world’s most expensive tea

Pot of gold

Tasting the world’s most expensive tea
10 best wildlife-watching experiences: From hen harriers to porpoises

From hen harriers to porpoises: 10 best wildlife-watching experiences

While many of Britain's birds have flown south for the winter, it's still a great time to get outside for a spot of twitching
Nick Easter: 'I don’t want just to hold tackle bags, I want to be out there'

'I don’t want just to hold tackle bags, I want to be out there'

Nick Easter targeting World Cup place after England recall
DSK, Dodo the Pimp, and the Carlton Hotel

The inside track on France's trial of the year

Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
As provocative now as they ever were

Sarah Kane season

Why her plays are as provocative now as when they were written
Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

Murder of Japanese hostage has grim echoes of another killing

Japanese mood was against what was seen as irresponsible trips to a vicious war zone
Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore