UK Politics

Owen Smith proposes wealth tax to boost NHS spending

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Media captionOwen Smith on wealth tax and 'minimum hours' contracts

Labour leadership hopeful Owen Smith says he would introduce a wealth tax on the richest 1% in society to fund the NHS and tackle inequality in Britain.

Mr Smith - who is challenging leader Jeremy Corbyn - said the "equality-busting" move would raise £3bn a year.

He also vowed to reinstate the 50p tax rate, strengthen workers' rights and end the public sector pay freeze, as he promised a workplace "revolution".

But he apologised after saying Labour should be "smashing" Theresa May.

Mr Smith, former work and pensions spokesman, is seeking to replace Mr Corbyn in a contest which ends on 24 September.

Mr Corbyn's campaign said he had led the way in promoting equality, pledging to tackle job insecurity and workplace discrimination which he has described as among the UK's "national ills".

Mr Smith has insisted he is "just as radical" as his rival, who was overwhelmingly elected last year on a platform of taking the party to the left, but claims he is more capable of uniting the party and preparing it to form a future government.

'Socialist revolution'

In a speech at the site of the former Orgreave coking plant in South Yorkshire, Mr Smith said greater equality needed to be at the heart of Labour's "mission for Britain", as he made a direct pitch to Mr Corbyn's supporters.

He committed to focusing policies on achieving "equality of outcome" rather than "equality of opportunity", saying he wanted the UK to have "world-beating" employment rights. He pledged to provide an extra 4% a year funding to the NHS.

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Media captionUnion boss: Owen Smith offering 'copycat policies'

Setting out plans for a wealth tax, he said it would be a charge of 15% on unearned income, for example from investment, that would only apply to people earning over £150,000.

"It's time we asked the very wealthiest in our society to start paying more," Mr Smith added.

He also proposed:

  • Reintroducing Wages Councils to boost pay above the minimum wage in sectors such as retail and care
  • Minimum guaranteed working hours and the abolition of zero hours contracts
  • Scrapping trade union reforms that curb the ability of unions to call strikes
  • To abolish the Department for Work and Pensions, replacing it with a Ministry of Labour and a Department for Social Security
  • Build 1.5 million homes over five years
  • Reverse cuts to capital gains tax and inheritance tax
  • No more cuts to corporation tax
  • Same rights for agency workers as full time workers
  • Workers to be placed on company remuneration committees

The MP - who has said Labour's constitution should be rewritten to explicitly state its commitment to reducing inequality - said: "We need to rediscover a sense of national mission for Britain.

"A faith that our country can't just have a brilliant past but a future as bright as its past... where the fruits of our collective success are shared once more, more equally.

To achieve that, he argued, "we need revolution not evolution", and added: "Not some misty-eyed romantic notion of a revolution to overthrow capitalism and return to a socialist nirvana.

"But a cold-eyed, practical, socialist revolution, where we build a better Britain and look the country in the eye and say 'this is possible'."


What are wages councils?

Image copyright Getty Images
Image caption The idea was introduced by Winston Churchill and expanded by Clement Attlee
  • Trade Boards - the forerunner to wages councils - were introduced by Winston Churchill in 1909 when he was President of the Board of Trade in the Liberal government of Herbert Asquith.
  • The first board was set up to cover the construction industry. Others followed when ministers were of the opinion that "no adequate machinery exists for the effective regulation of wages throughout the trade".
  • They were expanded by the post-war Labour government of Clement Attlee, becoming tripartite bodies made up of employer and employee representatives and independent members that conciliated during disputes. They set sectoral minimum wages and determined the general conditions of work in the sector with which they were concerned.
  • Ted Heath introduced legislation to make them easier to abolish in 1971. They were lessened further by Margaret Thatcher and abolished completely - with one exception - by John Major is 1993. The Agricultural Wages Board survived until 2013 when it was abolished by the coalition.

Mr Smith said there had been a "wasted decade" for public services and called the decision - by the Conservative-Lib Dem coalition - to scrap the last Labour government's Building Schools for the Future programme in England a "tragedy".

As a Labour prime minister he would ensure that schools in England once again had local democratic accountability.

In an attack on Mrs May - and Mr Corbyn's response to her at Prime Minister's Questions - Mr Smith said she had the "temerity" to lecture the opposition on social justice and insecurity at work.

"It pained me that we didn't have the strength and the power and the vitality to smash her back on her heels," he said.

"These are our values, these are our people, this is our language that they are seeking to steal But they will steal it, they will flood into the gap we leave, and if we split in this party - which is where I fear we are heading, and why I am standing here before you - they will continue to flood into that space.".


Analysis

By Chris Mason, BBC political correspondent

This was a pitch from Owen Smith groaning with new policy ideas, delivered in a spot groaning with symbolism - on an industrial estate near Orgreave, just outside Sheffield, the site of the battles between the police and miners in 1984.

It is now home to giants of modern industry such as Rolls Royce and Boeing - and so both a nod to Labour's past and its hopes for the future.

Mr Smith set out what he repeatedly described as a "radical" policy agenda. An agenda necessary, he believed, because of his bleak diagnosis of contemporary Britain: a country he saw as "frustrated, divided, increasingly intolerant and angry".

It was, in short, a suite of left wing policies aimed directly at those Labour members and supporters who were wooed by Jeremy Corbyn a year ago, but who Mr Smith now hopes to convert to his cause.

The big question for him is whether there are enough of them. Read more from Chris


Asked later about his choice of language, Mr Smith defended it as rhetoric. "I don't literally want to smash Theresa May. I'm not advocating violence in any way shape or form," he said, adding that Labour should be "smashing" the Conservatives in Parliament.

But pressed on his remarks by 5 News he said: "Perhaps it backfired, but we should have a bit of robust language in politics, I think."

And Mr Smith's office later issued a statement saying the remark "was off script and on reflection it was an inappropriate choice of phrase and he apologises for using it".

A spokesman for Mr Corbyn's campaign said: "We need to be careful of the language we use during this contest as many members, including many female Labour MPs, have said they feel intimidated by aggressive language.

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Media captionLabour MP Lisa Nandy says Owen Smith chose the wrong words about Theresa May

"Jeremy has consistently called for a kinder, gentler politics. We should all reflect that in our political rhetoric."

On the contents of Mr Smith's speech, a spokesman for Mr Corbyn's re-election campaign said the focus on equality of outcomes, reindustrialisation and workers' rights echoed policies and speeches set out by the Labour leader, and shadow chancellor John McDonnell.

"Owen's speech today shows the leadership that Jeremy Corbyn has demonstrated in placing economic justice and fairness back at the heart of Labour politics," they said.

"Under Jeremy, Labour has put restoring dignity and pride in our communities worst hit by decades of neglect at the core of our politics."

Image copyright Getty Images
Image caption Orgreave was the scene of a major confrontation between police and pickets during the 1984 miners' strike - an incident into which Labour has long demanded a public inquiry

Matt Wrack, from the Fire Brigade Union, said Mr Smith's policy announcements showed how far Mr Corbyn and Mr McDonnell "have shifted the policy debate" within Labour and politics more generally, "as many of these things wouldn't have been on the radar a year ago".

He said they had both "stood firmly with us on that - Owen Smith is now changing his position", adding that "credibility comes from consistency, and Jeremy Corbyn has been consistent".

The choice of location for Mr Smith's first major policy speech of the campaign will be seen as symbolic in his battle with Mr Corbyn to win the support of party members, trade unions activists and 180,000 or so registered supporters who have applied to vote in the contest.

The coking plant closed in 1991 and the site was redeveloped into a business park.

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