In Depth

Miliband’s mansion tax will destroy London communities

Already lawyers and bankers are taking over London neighbourhoods: this will make it easier for them

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There are good arguments for a mansion tax. The very rich employ fly accountants and lawyers to reduce their tax liabilities. This is most often achieved by moving assets offshore. But property cannot be shifted: it is, therefore, a suitably vulnerable target for revenue raisers. We suffer from gross inequality – not least in housing – and therefore the haves should be taxed to benefit the have-nots.

Whether its imposition will raise enough money to fund a doctor in every street – I exaggerate only slightly Ed Miliband’s estimate of the huge benefits of the mansion tax, together with a further imposition on tobacco firms and the blocking of some tax loopholes – seems unlikely. The well-heeled will, as ever, no doubt find a way round it.

But there are hundreds of thousands of people who – through no fault of their own – live in modest houses which, through inflation and the pressure on housing in London and the south-east, are ‘worth’ many, many times what their owners first paid for them. And here, for once, I agree with London’s mayor, Boris Johnson, who argues: “There will be loads of people inflated into this band – and they will be clobbered.”

The property website Zoopla estimates that home-owners in London and the southeast will bear 96 per cent of the brunt of the mansion tax, paying an average of £15,000 a year. Savills, according to the Daily Telegraph, puts it even higher at 97 per cent.

School-teachers, shopkeepers, health workers, and (yes) journalists, who bought homes in London in the 1960s and 1970s and now find them worth on paper £2 million-plus, will be among those “clobbered”. I know of one retired milkman and a former taxi driver who certainly fall into this category.

Their homes, when they bought them, were affordable by ordinary Joes. They sat tight, raised families, kept the roofs repaired, tended their gardens, and lived with the happy expectation that these houses would see them out. True, with inheritance tax, the next generation will in the vast majority of cases have to sell rather than take possession.

Already the character of areas where house prices have rocketed beyond reason – across London – is changing fast, because, each time such owners die or move, their homes are bought by bankers, lawyers or others with enormous salaries. Such people do not on the whole patronise local shops – except supermarkets – and they send their children to fee-paying schools, thus undermining ‘neighbourhood’ schools.

The situation is analogous to that many years ago of country villages, where the children of families who had worked the fields for generations could no longer afford to live in the cottages of their forebears. If lucky, they moved to (often drab) council estates run up on the peripheries of the village; more likely, they commuted to farm work from nearby towns. Second-homers and wealthy commuters took possession of rural homes.

Mixed communities – even to the limited extent that London districts are ‘mixed’ – are rapidly becoming unmixed. Downsizing – not just because their homes are too big, but because, even as things stand, many of modest income can no longer afford to live where they have lived all their lives – is commonplace. The mansion tax will fast accelerate the process.

There may not be gates at the end of every street affected in this way, reminding poorer folk that this is special territory, but the effect of the mansion tax will be similar. Our fast fragmenting society will increasingly live in ghettoes, the rich with the rich; the modest earners with other modest earners. The poor are already herded into often dreadful estates. Each to his place according to his means.

Labour tell us that the money is needed for the NHS, a reason that will (they hope) touch the heart strings of all. But as the furniture vans haul the possessions of the less affluent away from their homes, does Labour really expect them to say: “Well, at least the national treasure, the health service, stands to gain”?

The NHS is truly wonderful. I know well at least three people who have been gravely ill in the past year who are still with us because of the life-saving treatment they received at the hands of the NHS. However, none of the three spoke highly of the service’s organisation. 

I was summoned to the wrong clinic for a pre-op assessment; my wife went to an appointment to find that her notes had gone elsewhere; vital test results were not returned in time for a worried new mother. A friend received three identical letters (all saying the same, wrong, thing) in one post.

Money is not the whole answer to NHS problems. A more efficient use of what resources already exist would both save money and improve health care. Pouring more in – as when Gordon Brown was Chancellor – encourages inefficiency. By all means tax the very rich on their assets, but don’t turn harmonious communities upside down by squeezing every last penny out of people of limited means.

‘Dr’ Vince Cable, the Business Secretary and Lib Dem MP for Twickenham, was the first to suggest the mansion tax. His Twickenham constituency is exactly the sort of area where the hard-pressed and no longer well-paid live in houses where prices have risen disproportionately. Does he really want to face an electorate of bankers and lawyers? 

Miliband’s espousal of the mansion tax was clapped in Manchester yesterday. He may regret the proposal if it costs Labour seats in the southeast.

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