Jim Murphy’s mansion-tax boast is a cynical attempt to buy Scottish votes

06 Jan 2015
We have now embarked on the longest general election campaign in the history of Britain. Even political obsessives quail at the thought. So I plead guilty to bringing a little genuine political debate into the process so early on in the process. The issue is the new Scottish Labour leader, Jim Murphy, and his vainglorious boast that he is going to use mansion tax money from London and the south -east to pay for 1,000 new nurses in Scotland.

Let me stress that I support the mansion tax in principle. It is a redistributive tax, which is important, and taxes on assets are always worth considering.

The complication is that it is, in effect, a tax on London, 80% of which will be paid by people in London and the south -east. And the distorted nature of London’s housing market could mean a tax with wildly distorted effects. No one really knows how much it will raise. It seems likely that the people everyone agrees should pay it – the international super-wealthy – will use their expensive lawyers and accountants to evade it.

But it will hit older Londoners, often public sector workers who bought houses in what were then unfashionable parts of London, as in my constituency, Hackney North and Stoke Newington. Now they are living in houses worth £1m and rising. They are often asset rich but cash poor. Having seen London house prices spiral in value, they are not reassured by the idea that the mansion tax kicks in only at £2m. At the very least, a lot of work needs to be put in to reassure those voters, and to fashion a tax that will not hit those people unfairly. Fortunately the shadow chancellor, Ed Balls, has an open mind on the subject.

That is why it is surprising that Murphy has jumped in feet first, boasting about how he will spend money from a tax when there is no agreement on exactly how it will be levied.

I am a unionist, and I understand that the Labour party has a big electoral challenge in Scotland. But I cannot believe that Scottish voters will be taken in by a crude attempt to buy their votes with money expropriated from London. If Murphy is really interested in redistributing wealth, why isn’t he talking about council tax revaluation or levels of income tax in Scotland? Instead he seeks cheap applause by telling the Scots how he will extract money from England.

Recently there has been a series of reports, including from the London Finance Commission and the Royal Society of Arts City Growth Commission, calling for the devolution of powers to our great cities. In particular, experts are saying that big cities should be allowed to keep their property taxes – I believe that this process should start with the mansion tax.

Devolution cannot be for Scotland alone; there should also be devolution of powers to the cities and regions. Murphy cannot bully the rest of the UK about a considered devolution of fiscal powers to all our cities with a pre-emptive strike on the mansion tax.It is too easy to conflate London with bankers and the international glitterati. But London is more unequal than any other part of Britain. Child poverty is a third higher in London than the rest of England as a whole. So, general election campaign or not, we need a proper debate on devolution of powers to our great cities. It is part of the battle against the poverty that still exists in the shadow of the glittering towers of the City of London. And some people need to be prepared to stand up for London in this important debate.

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