Calm Down Jeremy Browne, Even Free Market Tories Worry About Immediate Top Rate Tax Cut

Calm Down Jeremy, Even Free Market Tories Worry About Top Rate Tax Cut
Minister of State for the Foreign and Commonwealth Office Jeremy Browne MP in his office in the Foreign Office in London.
Minister of State for the Foreign and Commonwealth Office Jeremy Browne MP in his office in the Foreign Office in London.
Clive Gee/PA Archive

The decision by Lib Dem former minister Jeremy Browne to break with his party and urge Nick Clegg to support cutting taxes for the richest voters has been warmly welcomed by Conservative MPs. But even free market Tories think Browne is going to far to call for the cut to be immediate.

Browne, who is considered to be one of the most economically liberal Lib Dems, has been mischievously courted by the Conservatives in the hope that he might defect. His has rejected the overtures. But the former Foreign Office and Home Office minister has not hidden his disappointment at being reshuffled out of government by Clegg last year.

He told the BBC today that it was "time to cut the top rate of tax back down to 40p". The top rate kicks in at earnings over £150,000.

The Lib Dem leadership has bitterly resisted any attempt by Tory MPs to persuade George Osborne to cut the rate, currently 45p, any further. Chief secretary to the Treasury Danny Alexander said it would only happen "over his dead body".

The Labour Party has frequently criticised the chancellor's decision to lower the 50p rate he inherited from the last government as a "millionaire's tax cut" designed to reward the rich while doing nothing to help the poor. Ed Balls has pledged to raise the rate back to 50p should Labour win the 2015 election.

Browne said to compete internationally Britain needed to "rewards work and wealth creation" by cutting taxes "for people both on low earnings and people on high earnings".

His intervention was met with approval by the Free Enterprise Group (FEG) of Tory MPs which advocates free markets and lower taxes as a way of stimulating growth and creating jobs. Lib Dems on the left of the party are less impressed.

A leading Conservative member of the group, Kwasi Kwarteng, said he agreed "completely" with the former Lib Dem minister, adding: "It's clear where Browne is coming from."

Mark Garnier, a member of the Commons Treasury committee, said he was pleased to hear from a "sensible Lib Dem", but said any cut should come a few years down the line.

"As a Conservative I think lower taxes will generate more tax revenue," he told The Huffington Post UK. "For a Lib Dem to agree with that is incredibly welcome. We need to send a message enterprise and should be rewarded."

But Garnier. said it would be wiser to wait until the Budget deficit had been significantly reduced before any top rate tax cut was made.

"It's got to be done on the basis of sending the right message to everyone, that we are not favouring rich people over of poor people," he said. "In the long term, my personal view is that, subject to fiscal resources priorities, a return to the pre 2010 change is right. But only when we can afford it."

Brooks Newmark, another Tory FEG member who sits on the Treasury committee, also told HuffPost UK a cut in the top rate of tax should not happen right away.

"In the long run we should be working towards simpler flatter taxes which would include lowering the 45p rate to 40p. I welcome Jeremy Browne's support for a tax cutting agenda," he said.

"However, until we have returned to sustainable growth and real wage increases, our priority should be cutting taxes for the low paid which is why the chancellor was right to raise the personal allowance in this years Budget to £10,500 thereby taking over 3.2 million people out of tax altogether."

Thatcherite former Tory cabinet minister John Redwood also welcomed Browne's comments. "I want to see the top rate of tax brought back down to the rate Gordon Brown always regarded as the highest rate feasible when he was Chancellor of the Exchequer," he told HuffPost UK. "A 40p tax rate should bring in more revenue from the rich than a 45p tax rate, as it is nearer to the international average. The UK has to be competitive if it is to succeed. Mr Jeremy Browne is right about that.

Many Lib Dems on the left of the party are unlikely to be happy with one of their senior MPs going even further on tax cuts for the wealthy than Tory MPs.

Naomi Smith, the co-chair of the party's internal Social Liberal Forum group, said Browne's economic plan was "centrist, not Liberal" and sounded "more akin to New Labour".

"It is highly unlikely that mainstream Liberals will recognise Jeremy's vision for less democracy as good practice for public services, let alone be encouraged to adopt, his call of 'trust in private companies, qualified by powerlessness'," she said.

Browne told the BBC's Today programme this morning he was "nervous" that the Lib Dems sometimes seemed more comfortable with "being a brake on the government rather than being an accelerator".

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