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
News
newsAnother week, another dress controversy on the internet
Life and Style
Scientist have developed a test which predicts whether you'll live for another ten years
health
Life and Style
Marie had fake ID, in the name of Johanna Koch, after she evaded capture by the Nazis in wartime Berlin
historyOne woman's secret life as a Jew in wartime Berlin
News
news... and what your reaction to the creatures above says about you
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
2015 General Election
May2015

Poll of Polls

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: Telesales & Customer Service Executive - Call Centre Jobs

£7 - £9 per hour: Recruitment Genius: Are you outgoing? Do you want to work in...

Ashdown Group: Finance Manager - Covent Garden, central London - £45k - £55k

£45000 - £55000 per annum + 30 days holiday: Ashdown Group: Finance Manager - ...

Ashdown Group: Systems Administrator - Lancashire - £30,000

£28000 - £30000 per annum: Ashdown Group: 3rd Line Support Engineer / Network ...

Recruitment Genius: Graduate Web Developer

£26000 - £33000 per annum: Recruitment Genius: A Web Developer is required to ...

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn