Quality | 2010.03.25
This Lib Dem myth | Tim Horton
The idea that left-leaning voters will feel happier in Clegg\'s party than Labour just doesn\'t add up
At the last election 2 million Labour supporters switched to the Liberal Democrats, many in protest over the war in Iraq. They have been urged to stick with this choice in 2010 by the former New Statesman editor John Kampfner , who reports that he feels more at home with the Lib Dems than with Labour.
Labour and the Lib Dems often spar over their progressive credentials. On civil liberties, many might sympathise with Kampfner. But his thesis that, on tax and spending, the Liberal Democrats are "the most redistributive of any party" is much more questionable. It certainly took a battering at the weekend, as Nick Clegg, the Lib Dem leader, praised Margaret Thatcher and insisted his party would now be a more ruthless cutter of public spending than the Tories.
But this was just the latest step in a rightwards shift the Lib Dems have been making under Clegg\'s leadership, in order to defend their seats against David Cameron\'s advance. A raft of former spending commitments have been ditched, such as a higher state pension and free care for the elderly. Charles Kennedy\'s famous pledge for a 50p top rate of tax – which attracted many Labourites in 2005 – was the first thing to be axed (since when it has been introduced by Labour).
This time round, the centrepiece of the Lib Dem manifesto is a radical £17bn tax cut in the form of increasing the income tax allowance. It has been branded as a tax cut focused on struggling families and "a vital measure of social justice".
The reality is very different. Raising tax thresholds doesn\'t help the poorest because they don\'t have enough to pay income tax. That\'s the unemployed, low-paid part-time workers and many pensioners. Analysis published this week shows that 3m households in the poorest quarter of the population would see not a penny from this £17bn policy.
Nor is it focused on struggling families. Increasing the income tax allowance is a society-wide tax cut, with most of the proceeds going to the better-off. Only £1bn of the £17bn cost goes on the stated aim of "lifting those on low incomes out of tax". In truth, most of the remaining £16bn is a juicy middle-class tax cut to sell in Conservative marginals around the country. It is an extraordinary priority at a time when public services are facing the axe.
Whereas Labour\'s tax credits have been progressive, giving most to the poorer half of society, the Lib Dem tax cut would be regressive, giving most to the richer half. Households near the top would get on average four times as much as the poorest.
The Lib Dems have some good proposals to pay for this measure, including restricting higher-rate pensions relief and tackling tax avoidance. But this welcome shift in resources away from the super-rich wouldn\'t stop this tax cut increasing inequality between the bottom and middle of society, including relative poverty.
And too often Lib Dem policies fail this redistribution test. Their mansion tax is another idea all progressives should support. But not when it\'s combined with a pledge to scrap the child trust fund – the only asset many poor kids will ever have.
In 2005 Michael Howard considered a boost in the income tax allowance for the Conservative manifesto. He rejected it as being too unfair. ("The poorest would have received just 7p a week, the richest £7," he said. "That is why we looked elsewhere".) The main cheerleader for the Lib Dem tax cut today is Norman Tebbit , not child poverty charities; he is urging the Tories to adopt it. Moreover, Clegg has delighted rightwingers by selling the policy as a crusade for "tax freedom" – a term straight out of the US Republicans\' phrasebook.
So in his budget next week, Alistair Darling should, calmly and politely, set out Labour\'s different priorities. The reality is that many on low and middle incomes would be vastly better off if future resources were put into tax credits or protecting public services. (And then there\'s that £178bn deficit to think about.)
It\'s not that there aren\'t many decent progressives in the Liberal Democrats, people like Steve Webb and Evan Harris . And Clegg does have a difficult balancing act to pull off. He is right that in 2005 being too Bennite in Brent put off nice Tories in Torbay. And I suspect many Labour party members will secretly wish him well in his electoral battles with the Conservatives.
But, with all respect to John Kampfner, the Lib Dems still have some way to go before they can claim the mantle of social justice from Labour.
For more information, please visit
http://www.guardian.co.uk/commentisfree/2010/mar/17/this-lib-dem-myth
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