Not only was Ed Miliband’s big speech on the economy not the ground-breaking tour de force some had hoped; shorn of the rhetoric, it merely emphasised how little there is to choose between the main parties. True, the Labour leader set out an eye-catching pledge to re-establish the 10p tax band so controversially axed by Gordon Brown, and pay for it with a “mansion tax” on properties worth more than £2m. Scratch the surface, however, and there is little to suggest either the distinctive approach or the convincing recipe for immediate economic recovery that Mr Miliband claims.
Contrary to the implications of the speech, a return to the 10p rate is no Labour brainwave. In fact, discussions have been rumbling on all sides of the political spectrum in recent months. Proposals are under review in the Treasury, and even the Prime Minister weighed in this week. The Chancellor may not be a fan, but it is, nonetheless, misleading for Mr Miliband to claim the idea quite so vociferously as his own. And if the 10p plan is an attempt to spike the guns of one half of the Coalition, the proposal of a mansion tax is a straight theft from the other. So much for a “Labour vision”.
Mr Miliband does deserve full marks for his tactics. In one move, the Labour leader has fended off critics’ claims that he is all talk and no policy; he has distanced himself – in part, at least – from the toxic heritage of Mr Brown; and he has both proffered an olive branch to the Liberal Democrats and done his best to drive a wedge between the Coalition partners in the meantime. The attempt to steal a march on the Chancellor six weeks from the Budget, is also ingenious. As is his winding it all together with the end of the 50p tax rate – easy to characterise as a sop to the rich, so long as the boost to the Exchequer is overlooked.
Clever politics, then; but what of the substance? As regards his tax plans, the Labour leader is half right. This newspaper has consistently supported the introduction of a mansion tax and continues to do so. We would also make the case for reducing the tax burden on the lowest earners. Here, though, the Opposition’s sums do not quite add up. Even the most optimistic forecasts expect a mansion tax to raise only £2bn, a far cry from the £7bn-odd cost of a 10p rate. Nor are the advantages much more convincing. The estimated £100-a-year benefit is not enough of a lift in spending power to kick-start economic growth.
Most important of all, the 10p tax – for all its totemic political value – is not the most effective way to keep money in the pockets of the lowest-paid. Far better to raise the income tax threshold than add yet more complexity with extra rate bands. Increases to the personal allowance since the Coalition took office have already done much to ameliorate the ending of the 10p rate. With the threshold set to rise again next year, taking it within spitting distance of the (Liberal Democrat) target of £10,000, a new low tax rate is an unnecessary distraction.
Mr Miliband’s speech was, of course, not just about tax. He spoke convincingly about improving skills, cracking the dominance of the big energy suppliers, and creating a “technical baccalaureate” to run alongside A-levels. All are commendable aims. But what was striking was the overlap with either existing Coalition plans or proposals from one or other of its members. Even the repeated references to “working people” sounded suspiciously similar to the Tory pre-occupation with “strivers”. For all the talk of forks of the road and big choices to come, then, Mr Miliband has, more than anything, underlined the limited room for manoeuvre.