Labour was plunged into civil war over the Mansion Tax today after the party’s new Scottish leader boasted that Londoners will pay for 1,000 new nurses for Scotland.
Labour candidates for London Mayor reacted with horror to Jim Murphy’s comments. Diane Abbott called them “surprising” while Dame Tessa Jowell warned against treating London as “a cash cow”. David Lammy said it showed money would be “siphoned off” from the capital by a Mansion Tax on £2 million-plus homes.
Boris Johnson waded in by calling it a “bribe” to Scots voters at London’s expense, while Tory chairman Grant Shapps accused Mr Murphy of adopting the southern-bashing rhetoric of the Scottish National Party.
The row erupted after the first major policy speech given by Mr Murphy since he was put in charge of reviving Labour’s battered fortunes north of the border, where an SNP surge is endangering Ed Miliband’s hopes of a Commons majority at the general election.
He declared: “We will tax houses in London and the South East to pay for 1,000 new nurses in the Scottish NHS. It’s a real win-win for Scotland.”
Mr Murphy said he was simply spending Scotland’s share of a UK-wide tax, but he stressed that few Scots would be payers and “the vast majority are in London and the South East”.
A string of Labour’s mayoral hopefuls responded with dismay and urged changes to the Mansion Tax, which shadow chancellor Ed Balls hopes will raise £1.2 billion for the NHS.
Mr Lammy said: “This has been my concern about the Mansion Tax from the start: that up to 90 per cent of it will come from the pockets of Londoners while only a tiny proportion will be spent on London’s public services. It cannot be right, when one in three Londoners is living in poverty, that the money raised from London taxpayers continues to be siphoned off to other regions.”
Ms Abbott said: “I am surprised that Jim has said this. I support the Mansion Tax in principle ... but Jim needs to study the series of reports ... which recommend that our great cities, like London, should be allowed to keep their property taxes.”
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Dame Tessa agreed that the capital should keep more of its taxes, saying: “London’s needs are great - we cannot simply act as the cash cow for the rest of the UK.”
Research for the Evening Standard last year found 86,000 London homeowners will be hit by Labour’s Mansion Tax, some 80 per cent of the 110,000 households caught across the UK.
Mr Johnson said Labour was panicking and trying to placate nationalists in Scotland. “They have decided to be fiscally vindictive to London to bribe the Scots to vote Labour,” he claimed.
A Labour spokesperson said: “A Mansion Tax would benefit all parts of the UK by helping to pay for thousands more doctors, nurses, midwives and care workers.”
