Cameron and Miliband under pressure on parties’ tax and spending plans
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Version 0 of 1. David Cameron and Ed Miliband were both under pressure on Thursday over their main pre-election tax and spending proposals unveiled at their party conferences. Grant Shapps, the Tory chairman, struggled to explain how his party would pay for a £7.2bn double tax-cutting pledge that was the centrepiece of the prime minister’s conference speech. But the Labour plan to fund extra NHS spending from a “mansion tax” on properties worth more than £2m ran into trouble when the veteran leftwinger Glenda Jackson became the latest in a line of the party’s MPs in London to cast doubt over the policy. In a statement on her website, the MP for the marginal seat of Hampstead and Kilburn said it would “impact disastrously on people who are asset rich but revenue poor, particularly pensioners, who bought their houses many years ago and through no fault of their own have seen the value rise because of the ludicrous London house prices”. The two parties traded blows over their tax and spending plans after their leaders unveiled headline measures that are designed to shape their general election campaigns. Shapps failed to explain on the BBC2 Daily Politics programme how the party would pay for the Tory plan to raise the personal tax allowance from £10,500 next April to £12,500 and raising the 40% tax threshold from £41,900 to £50,000. The proposals, which could respectively cost £5.6bn and £1.6bn, would be introduced by 2020. The Tory chairman suggested that George Osborne, the chancellor, would set out how he would pay for the tax cuts in his autumn statement and in the budget shortly before the general election even though the Liberal Democrats have given the Tories no authority to make fiscal decisions beyond 2016. He told the Daily Politics programme: “We now have an autumn statement, a budget, and of course a manifesto, and we will lay out in enormous detail every single penny of the way that we will get to this reduction.” Shapps said that the Tories could be relied on because they have credibility in tackling the fiscal deficit. He said: “You only have to look at what we have done over the last four-and-a-half years. We have cut the deficit … At the same time, we have ensured that somebody earning the minimum wage now pays two-thirds less tax. We intend in the next parliament [to] get rid of the rest of the deficit and, by the way, we’ll make sure that somebody on the minimum wages pays no tax at all. And somebody at the middle would not have to pay tax on their higher rate until they earned £50,000. This is a very clear direction, we have the credibility because we have done it already.” Chris Leslie, shadow chief secretary to the Treasury, blogged on the Politics Home website: “In the 24 hours since he delivered his speech not a single minister, including former Treasury minister Nicky Morgan, has been able to set out any more detail of how the billions of pounds needed to pay for these pie-in-the-sky tax cuts in in six years’ time will be raised. This is a Tory party with a record of giving with one hand but taking away much, much more with the other.” A Tory spokesman clarified the party’s position and said that the tax cuts would be funded through spending cuts. The party plans to introduce the tax cuts after the structural budget deficit has been eliminated by 2018. The spokesman said: “This will not be funded by increasing other taxes on hardworking people – we are not going to give with one hand and take away with the other. Our main focus will be on reducing spending in order to eliminate the budget deficit and cut income taxes for hardworking people. Judge us by our record. By May 2015 we will have halved the deficit and raised the personal allowance by around £4,000.” The Labour leadership is finding itself under pressure now that one in six of the party’s MPs in London has publicly expressed doubts about Miliband’s plan to introduce a mansion tax. Jackson spoke out after fellow London MPs Diane Abbott, David Lammy, Margaret Hodge, Dame Tessa Jowell and Nick Raynsford all expressed reservations about the tax. With a London mayoral election coming up in 2016, some within Labour fear it could harm the party’s chances of taking back control of the city when Conservative incumbent Boris Johnson steps down, as well as potentially losing them some votes at the general election. Abbott, Hodge, Lammy and Jowell are all tipped to throw their hat into the ring to be mayoral candidates. The idea of a mansion tax is backed by the majority of the public, according to opinion polls. Miliband has said the proceeds would be used to help to fund 20,000 new nurses, 8,000 more GPs, 5,000 new home-care workers and 3,000 new midwives. On top of that, Labour has made it clear that asset-rich, cash-poor pensioners would not suffer, saying the party would look at a relief scheme or a way to allow those on modest incomes to defer payment until the property was sold. It came as an analysis by the estate agent Knight Frank showed almost half of all affected properties would be in the two prime central London boroughs of Westminster, and Kensington and Chelsea. The firm said around 38% of all £2m properties were flats, 36% terrace houses, 12% semi-detached and 14% detached properties. |