Liberal Democrats were ‘passed over’ in ditching of mansion tax

Political Editor

A plan to drop the Liberal Democrats’ support for a mansion tax on homes worth more than £2m has provoked an angry backlash from party activists.

Nick Clegg is backing a move by Danny Alexander, the Liberal Democrat Treasury Chief Secretary, to ditch the proposed 1 per cent annual levy on the value of a home above £2m. Instead, the party leadership wants to impose new council tax bands for properties worth more than that.

But Liberal Democrat activists are furious because the switch has not been discussed by the party’s policy-making machinery. Liberal Democrat members still have a strong influence over policy.

The criticism of the plan poses a new headache for the Liberal Democrat leadership after Jeremy Browne, the Liberal Democrat MP and former minister, questioned the party’s relevance at the weekend, saying it wouldn’t “be necessary to invent an ill-defined moderating centrist party that believed that its primary purpose was to dilute the policies of other political parties”.

Gareth Epps, co-chair of the Social Liberal Forum, the biggest grassroots group on the party’s left, told The Independent: “This is only a proposal.  Danny knows full well that Liberal Democrats make policy democratically.”

Mr Epps said council tax urgently needed to be reformed or abolished, adding: “Basing a tax on property valuations a quarter of a century old is nonsense. But further evaluation is needed.”

Mr Alexander believes extra council tax bands at the top end of the property market would be less bureaucratic than a 1 per cent levy. He thinks the original plan could have prompted a flood of appeals from householders claiming their homes are worth less than £2m.

Liberal Democrat leaders believe their new plan would be more likely to win the backing of the Conservatives in coalition negotiations if next year’s general election ends in a hung Parliament. George Osborne was ready to include a mansion tax in his 2012 Budget but David Cameron did not want to impose a “new” tax. Liberal Democrats believe the Prime Minister is more likely to back the extension of an existing one.

No final decision on the level of the proposed charges has been taken. Some Liberal Democrat insiders believe it could be as high as £5,000 a year. Allies of Mr Alexander insist he is not trying to bypass the party’s machinery. “Danny has given this a lot of thought. We are not abandoning the principle of the tax. It’s about making it a reality,” one said.

The eight bands on which council tax is based in England – from A (up to £40,000) to H (more than £320,000) – have remained the same since 1991. This means the charge for a home worth £600,000 is the same as one valued at £6m or £60m.

Although the extra charge on expensive homes would be collected by local authorities, the money would be handed to the Treasury. Surveys suggest more than 80,000 properties are valued at £2m and more, with two-thirds of them in the three London boroughs of Kensington and Chelsea, Westminster and Camden.

Tony Travers, director of the Greater London Group at the London School of Economics, said someone with a lower income living in a high-value London property would have to pay the proposed tax while a person earning more than £1m living outside the capital could avoid it.

POLICY IN NUMBERS

£2m: The cost of homes on which Lib Dems wanted to impose a mansion tax

£5,000: The possible level of the tax

£320,000: The valuation on which Band H of the council tax is calculated

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
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

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Guru Careers: Software Developer

£35 - 40k + Benefits: Guru Careers: We are seeking a Software Developer (JavaS...

SThree: Trainee Recruitment Consultant / Resourcer

£18000 - £23000 per annum + Commission: SThree: As a Trainee Recruitment Consu...

Ashdown Group: UI Developer - (UI, HTML, CSS, JavaScript, AngularJS)

£25000 - £40000 per annum: Ashdown Group: UI Developer - (UI, JavaScript, HTML...

Day In a Page

Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?