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?
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
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

Ashdown Group: Senior Accounts Assistant - Accounts Payable - St. Albans

£26000 - £28000 per annum + benefits : Ashdown Group: Senior Accounts Assistan...

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Recruitment Genius: Installation and Service / Security Engineer

£22000 - £40000 per annum: Recruitment Genius: This company is part of a Group...

Recruitment Genius: Service Charge Accounts Assistant

£16000 - £18000 per annum: Recruitment Genius: Are you a a young, dynamic pers...

Day In a Page

General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions