In a blow to Ed Miliband and Ed Balls, who aim to use £1.2bn raised from the mansion tax to help pay for a new £2.5bn “Time to Care” NHS fund, the former business secretary said his party should instead adopt the Liberal Democrat proposal for higher council tax bands.
Speaking on Newsnight on BBC2, Mandelson said he favoured finding new ways of taxing property in Britain. But he added: “I don’t happen to think that the mansion tax is the right policy response to that. I think it’s sort of crude, it’s sort of short-termist.
“What we need is what I think the Liberal Democrats are proposing and that is the introduction of further bands that relate to different values of property within the council tax system. That’s what I would like to see. It will take longer to introduce, that’s true, but it will be more effective and efficient in the longer term than simply clobbering people with a rather sort of crude short term mansion tax.”
Mandelson is the latest senior Labour figure to criticise the party’s plan to impose a tax on properties worth more than £2m to help raise £1.2bn towards the £2.5bn costs of a new “Time to Care” NHS fund. This is designed to support 20,000 more nurses, 8,000 more GPs and 5,000 more care workers by 2020.
The likely contenders for the Labour nomination for the 2016 London mayoral contest, including Dame Tessa Jowell and David Lammy, have all warned that the mansion tax would hit elderly people who have a valuable asset but who have little income. Even Diane Abbott, the left wing MP for Hackney North and Stoke Newington, has criticised the mansion tax.
The Labour leadership is likely to respond to Mandelson by saying that the mansion tax would be introduced in a progressive way. People who own homes worth between £2-3m would pay around £3,000 a year. A higher charge would be levied on homes above £3m.
Elderly people living in homes worth more than £2m would be able to defer the payment until their death or until they sell the property as long as they are not higher rate taxpayers.
Mandelson has made little secret of his unease over Miliband as the Labour leader makes clear he believes the centre of political gravity has moved to the left in recent years. The former business secretary, who has formed something of a political partnership with Ed Balls in the last few years, calls on Labour to revive the success of the Bill Clinton and Tony Blair years.
He said: “We have to make sure that what we are doing is, in a sense, recreating the policies we saw in the Clinton-Blair era where we saw a pro-business liberal economic approach but combined with very strong policies and interventions by government in order to create opportunities for individuals and to redistribute income and wealth more fairly.”
Mandelson said he was not aware of the confrontation between the Labour shadow arts minister Chris Bryant and the singer James Blunt over social class. Blunt accused Bryant of being a “classist gimp” after the frontbencher questioned why so many leading figures in the acting and singing professions had been privately educated.
But the former business secretary made clear he felt uncomfortable with any attempts to highlight class divisions. “I don’t know what Chris Bryant said, I don’t know what James Blunt said in response. I think glibness, I think ideologically based rhetoric, I think trying to divide up society between the haves and have–nots and mobilise the middle ground against the rich is as unacceptable as we have from elsewhere in the political spectrum trying to mobilise the middle ground against what they call welfare scroungers but are actually poor people who have little and want more.
“I don’t like that polarisation, that political polarisation, partly because it doesn’t lead to very good policy, it doesn’t help you get elected, and thirdly it doesn’t have much chance of creating the sort of consensual politics you need in a country like Britain to create the sort of society we want to see.”
guardian.co.uk © Guardian News and Media Limited 2010