Labour may fight the next election on a pledge to bring in a "wealth tax" on owners of high-value properties, it emerged yesterday.
Ed Miliband warned there would be winners and losers under Labour's plans to eliminate Britain's deficit in a different way to the Coalition. He also promised to be different from the previous Labour government – and went further than before in admitting his party's failures during the Blair-Brown era.
"We have to recognise some of the things we didn't achieve," he said. He acknowledged that inequality between the very top and the very bottom grew; too many people found themselves stuck in low-skilled, low-wage jobs and that Gordon Brown's tax credits were not enough.
"Fairness wasn't hard-wired into our economy and society," he said. He admitted that, as Energy Secretary, he was not "strong enough" in preventing the Big Six energy firms from abusing their dominant position.
In an important speech designed to launch a personal and party fightback, the Labour leader said: "Whoever governs after 2015 will have to find more savings." He added: "In these times, with less money, spending more on one thing means finding the money from somewhere else. When someone wins, someone else loses... If you want to make taxes fairer for those on middle and low incomes, your priority can't be to scrap the 50p rate for those earning £150,000 or more."
In the new straitened times, he said, Labour would have to find other ways to deliver fairness rather than spending more, as it did during its 13 years in power. Although no decisions have been taken, he hinted that the party might increase the proportion of revenue needed to clear the deficit to be raised by higher taxes, with less coming from spending cuts than under the Coalition's plans.
The "squeezed middle" championed by Mr Miliband would not face higher taxes, which would be targeted on the highest earners. Rather than extend the 50p top tax rate, Labour might impose a new property tax, which would be harder to evade.
One option would be similar to the mansion tax on homes worth more than £2m which was advocated by the Liberal Democrats at the last election. Although they have pressed it recently inside the Coalition, David Cameron and George Osborne are not keen and the Government looks unlikely to adopt it – leaving the field clear for Labour.
Mr Miliband's speech, designed to convince voters that Labour is serious about clearing the deficit, was criticised by the Conservatives and Liberal Democrats for lacking detail of what would be cut. The Labour leader said his party would not be able to reverse the Coalition's reduction in winter fuel allowances for pensioners. Instead, he announced that energy companies would be forced by law to place customers aged over 75 in the cheapest tariff for their gas and electricity to save them an average £200 a year.
A Labour government would "take on" train companies, insisting a cap on fare rises would apply to every regulated train fare – not just less busy routes.
He cited these as examples of how Labour would tackle "vested interests" and ensure fairness without adding to public spending. If Labour regains power, a higher burden would fall on private companies under Mr Miliband's "responsible capitalism" agenda.
He is attracted by the idea of a living wage of about £7.85 an hour, higher than the £6.08 an hour national minimum wage, and said councils offering contracts to private firms could insist on them paying the higher rate. But he said Labour would ensure the scheme was credible before adopting it as policy.
Despite his talk of tough choices on cuts, Mr Miliband said he was personally committed to universal benefits such as child benefit and the state pension and was not in favour of asking people to pay towards treatment on the NHS.
He dismissed sniping at his performance and poll ratings as "noises off". He told his critics: "Don't declare the result of the race when it is not yet half-run. I have a very strong inner belief I will win the race." Admitting Labour had not yet won the economic argument, he said: "This Coalition Government has shown... it is losing the argument. I am determined not just that we can win it, but that I can win it."
Too ugly to lead? So says the perfect face for radio...
Ed Miliband faced an unusual problem for a male politician yesterday when he had to fend off a suggestion that he is not handsome enough to be Prime Minister.
The Labour leader laughed in the face of his interviewer, John Humphrys, as the question was put. Later, he countered questions about whether he has the personality of a leader by suggesting that Humphrys join him when he was out meeting the public and "then you make the judgement".
The question was prompted by opinion poll results which suggest that about two-thirds of voters do not rate Mr Miliband as a party leader, implying that he might be a hindrance to the Labour Party.
On BBC Radio 4's Today programme. Humphrys recounted a private conversation with the late Robin Cook, a leading member of Labour's front bench, who decided not to run for the leadership against Tony Blair in 1994.
"I asked him if he was going to go for it and he said 'No' and I said, 'Why not?' He said, 'They wouldn't have me – I'm too ugly'," Humphrys said.
"Is that a comment on me, John? My goodness!" Mr Miliband replied, laughing.
Humphrys hurriedly added: "I'm not suggesting that you, Ed Miliband, are too ugly."