I attended a Hustings event in a Catholic church in North West London. For me, the most remarkable point of a quite entertaining evening was when the priest rose to ask a question. What would it be? Poverty? Food banks? Bedroom tax? Help for the starving of the world? No, he asked about Mansion Tax and the problems his parishioners would have paying it. Perhaps I will send him a few Cafod leaflets, or perhaps Trussell Trust?
This little tale illustrates the point that the Mansion Tax has some traction in parts of London, despite being generally popular. Not enough to change the political direction, but it has become an issue that lots of people talk about. Despite Labour’s best efforts, there has been quite an effective disinformation campaign by the Conservatives. Several candidates have sent out thousands of letters designed to look like an official demand for the tax from the local council – ‘Mansion Tax Revaluation Information’ – implying that people would have to pay up to £20,000. In some constituencies the Tory candidates appear to talk about nothing else.
Of course the Tories, and therefore most of the media, never mention Labour’s two most important caveats on the policy:
- First, that the £2 million starting threshold will rise linked to increases in prime property values, not any other index, so that the number of homes caught by the tax should not increase. Because people are not aware of this, the most worried people are those who will not pay it but fear that they might have to.
- Secondly, that there is a powerful deferral mechanism so that anyone earning £42,000 or less will not have to pay the tax out of income, it can become a charge on the property when it is sold. This addresses the ‘asset rich income poor’ problem but it has not entered the consciousness: so many people simply say that they cannot afford to pay £250 a month and will have to move.
A common theme amongst complainants goes like this: ‘We bought our house with a big mortgage thirty years ago and we have carried out big improvements. It’s not our fault that property prices have risen so much and the house is now worth so much. It is our family home and it is unfair for us to be forced to move.’ Apart from illustrating that they are not aware of the deferral policy, there is a touching belief that the rise in value is down to their own efforts and not an unearned windfall from being in the right place at the right time through the property bubble – the point that justifies this tax.
Conservatives are being disingenuous in another way as well. The fact is that many of them believe in raising more tax on high value property, just not Labour’s Mansion Tax. Paul Dimoldenberg has traced many of their policy pronouncements on this issue.
Just one example illustrates the point. Conservative MP for Westminster South until Parliament was prorogued, Mark Field, is in favour of re-banding council tax and adding new bands to the top (similar in principle to the Mansion Tax). He says:
“..the (current Council) tax is not even particularly proportionate to property values, with the same amount levied on all homes valued at over £320,000 in 1991 prices. This means that around half of all houses in the capital are now placed in the same council tax band even if their size, location and value are vastly different. A Knightsbridge oligarch, for instance, is paying £1353.48 annual council tax for a £60 million home – exactly the same as properties worth one-thirtieth that sum.
Let us take Westminster as our example here. In this Central London borough, a Band H property would now likely be worth over £2 million and there are now just under 15,000 of such homes. But there is a vast difference between a £2 million flat in Pimlico and a home valued at £60 million at One Hyde Park. So the local authority might be empowered to impose two additional bands – there could be, for instance, Band H for prime properties worth between £2 and £5 million; Band I for so-called ‘intermediate prime’ properties in the £5 to £15 million bracket; and finally Band J for super prime properties worth over £15 million”.
Now Conservatives are not going from door to door saying ‘oppose Labour’s Mansion Tax, support the Tory super council tax’. Perhaps Labour should tell people on their behalf.
Stunningly high property values in the central/west/north-west London constituencies have a big impact in relation to another Tory policy: the right to buy. Under their current proposals, the cost of discounts (up to £103,000 in London) for housing association tenants exercising the right to buy will be met by forcing councils to sell their most valuable or expensive council housing.
The detail of the policy reveals their definition of ‘expensive’: over £340K for a one bed flat, £400K for a 2 bed, and so on. In Westminster, the cheapest 1, 2, and 3 bed flats are above the threshold. This means that it is likely that every flat becoming available for letting in Westminster will have to be sold. Paul Dimoldenberg reveals that Westminster Council estimates that 410 council flats will become empty and available for letting in 2015-16. All of these flats will have to be sold off and, in the current market, are likely to go to property speculators, foreign buyers and buy-to-let landlords. As Paul says:
The stark implications of this policy is that no local families will ever be rehoused in Westminster again as the Council will be forced to sell off all its flats which come vacant. Only the rich will ever be able to live in Westminster. This will be a hammer blow to local communities all over Westminster.
The impact in neighbouring boroughs like Camden and Hammersmith will be less dire but still very dramatic. In these constituencies it is to be hoped that the Tories’ sell off plans will replace the Mansion Tax as the main topic of conversation. Even for priests.