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
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
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

Ashdown Group: Front-End UI Application Developer

£30000 - £40000 per annum + Benefits: Ashdown Group: Front-End UI Application ...

Recruitment Genius: Digital Account Executive

£18000 - £26000 per annum: Recruitment Genius: They work with major vehicle ma...

Recruitment Genius: Service Engineers - Doncaster / Hull

£27000 per annum: Recruitment Genius: Domestic Service Only Engineers are requ...

Recruitment Genius: Employability / Recruitment Adviser

£23600 - £27500 per annum: Recruitment Genius: The Employability Service withi...

Day In a Page

Where the spooks get their coffee fix: The busiest Starbucks in the US is also the most secretive

The secret CIA Starbucks

The coffee shop is deep inside the agency's forested Virginia compound
Revealed: How the Establishment closed ranks over fallout from Loch Ness Monster 'sighting'

How the Establishment closed ranks over fallout from Nessie 'sighting'

The Natural History Museum's chief scientist was dismissed for declaring he had found the monster
One million Britons using food banks, according to Trussell Trust

One million Britons using food banks

Huge surge in number of families dependent on emergency food aid
Excavation at Italian cafe to fix rising damp unearths 2,500 years of history in 3,000 amazing objects

2,500 years of history in 3,000 amazing objects

Excavation at Italian cafe to fix rising damp unearths trove
The Hubble Space Telescope's amazing journey, 25 years on

The Hubble Space Telescope's amazing journey 25 years on

The space telescope was seen as a costly flop on its first release
Did Conservative peer Lord Ashcroft quit the House of Lords to become a non-dom?

Did Lord Ashcroft quit the House of Lords to become a non-dom?

A document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company - netting him $11.2m
Apple's ethnic emojis are being used to make racist comments on social media

Ethnic emojis used in racist comments

They were intended to promote harmony, but have achieved the opposite
Sir Kenneth Branagh interview: 'My bones are in the theatre'

Sir Kenneth Branagh: 'My bones are in the theatre'

The actor-turned-director’s new company will stage five plays from October – including works by Shakespeare and John Osborne
The sloth is now the face (and furry body) of three big advertising campaigns

The sloth is the face of three ad campaigns

Priya Elan discovers why slow and sleepy wins the race for brands in need of a new image
How to run a restaurant: As two newbies discovered, there's more to it than good food

How to run a restaurant

As two newbies discovered, there's more to it than good food
Record Store Day: Remembering an era when buying and selling discs were labours of love

Record Store Day: The vinyl countdown

For Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
Usher, Mary J Blige and Will.i.am to give free concert as part of the Global Poverty Project

Mary J Blige and Will.i.am to give free concert

The concert in Washington is part of the Global Citizen project, which aims to encourage young people to donate to charity
10 best tote bags

Accessorise with a stylish shopper this spring: 10 best tote bags

We find carriers with room for all your essentials (and a bit more)
Paul Scholes column: I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England

Paul Scholes column

I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England
Jessica Ennis-Hill: 'I just want to give it my best shot'

Jessica Ennis-Hill: 'I just want to give it my best shot'

The heptathlete has gone from the toast of the nation to being a sleep-deprived mum - but she’s ready to compete again. She just doesn't know how well she'll do...