EXCLUSIVE: Nick Clegg to launch new ‘Ocado Tax’ to hit super-wealthy and woo ‘Lidl Britain’

by Stephen Tall on April 1, 2012

Keep your eyes peeled this morning for a dramatic announcement from Lib Dem leader Nick Clegg as he launches a new policy initiative — dubbed the ‘Ocado Tax’ — designed to target the super-wealthy in society.

The tax will levy an additional 1.4% VAT on all own-brand supermarket food marketed as Premium or Finest (or equivalent) in food retail outlets throughout the country. Lib Dem strategists have chosen the name ‘Ocado Tax’ deliberately to demonstrate that this is not a punitive tax on ordinary people, but rather a carefully targeted tax affecting only those who can afford to pay it.

The new tax is expected to raise up to £88m in its first year, and the party has suggested this might be hypothecated to reduce VAT on fruit and vegetable produce marketed in supermarkets’ Value range: “This is potentially a real win-win for the party,” I was told. “Not only can we identify ourselves with a tax which only the wealthiest will pay, but we can also nudge poorer people into buying healthy food.”

Here’s the text of what Nick Clegg is expected to announce this morning:

“Our problem is what I call Ocado greed — the super-wealthy executive whose weekly grocery bill exceeds the monthly salary of his secretary. It’s easy to throw rhetorical rocks at the supermarkets. But, if we are honest, this is as much a failure of politicians and regulators failing to stop the rich from spending on excessive luxury — such as Finest sundream tomatoes or Premium antipasti. I want to clamp down on their bingeing, to call time on those gluttons putting the cad into Ocado.

“How can it be right that someone shopping today in the most affluent neighbourhood in Sheffield will enjoy food to-die-for on average 14 years longer than a shopper born in the poorest neighbourhood a few miles away?

“Liberals from John Bright to the present day have always been fierce advocates of free trade. The agricultural landlords of the 19th century and early 20th century were happy for working people to pay more for their food because of protective tariffs — what Lloyd George in 1906 memorably called ‘stomach taxes’.

“But liberalism, like any ideology, needs constant updating to stay relevant. Traditional values in a modern setting, to coin a phrase. And it is very much in that liberal free trade tradition that I today announce my intention to levy new ‘stomach taxes’. But Liberal Democrats will take great care to target them at the wealthy shopper. And in return we will offer real ‘stomach cuts’ to ordinary, hard-working families.

“For me, this is pure gut instinct. It’s time that those with the broadest shoulders (and often waists) were subject to a little wallet-slimming. Last year, I said we would focus on Alarm Clock Britain. Now I want to reach out to all the Lidl people in this country — Lidl Britain as I think of it — and turn us into a Liberal Britain.”

This latest idea is a response to internal Lib Dem polling which suggests that, though the party has attracted some positive publicity for its budget success in raising the income tax threshold, it is ideas such as Nick Clegg’s ‘tycoon tax’ and Vince Cable’s ‘mansion tax’ which have earned highest recognition among swing voters.

The name ‘Ocado’ registered almost as negatively as ‘banker’ when tested among left-leaning 2010 Lib Dem voters, and it is no coincidence that the policy is being launched this morning following George Galloway’s shock win in Bradford West. “Nick has urgently asked for an eye-catching initiative with which he can personally be associated,” according to a senior party insider I spoke to.

Reducing VAT on Value-range fruit and veg was an idea originally mooted by the Tories’ departing guru Steve Hilton, but rejected by David Cameron a couple of months ago. The Prime Minister had questioned whether the poorest really would benefit.

“For David, the idea that a Value range even existed was a real stumbling block,” commented one Tory advisor. “When we showed him the kind of packaging this food comes in he was frankly appalled, and said he couldn’t imagine anyone — even the poorest top-rate taxpayers — could be nudged into buying it even if it were given away free.” I understand this was the final straw for the colourful Mr Hilton, who shortly afterwards announced his exit from Number 10.

ConservativeHome founder Tim Mongtomerie welcomed the emphasis on tax-breaks for Value produce:

“If the Conservatives want to build a majority in 2015 we need to attract Value voters. But that will only be credible if the party fields candidates who look like they buy Value goods. They need to look ordinary, be ordinary and think really very ordinarily indeed.

“Frankly we need fewer MPs who look at home in the Officers’ Mess and more MPs who make a mess when eating. That’s the only way you can appeal to the working-class in the north. Conservative HQ should take a lead by serving a hot meal to staff at midday and make them call it dinner — some will find this change painful, but Lord Ashcroft’s polling has shown it could help win up to 15 marginal seats for the Tories (if he also bankrolls their campaigns).”

Details of Nick Clegg’s announcement have been kept a closely guarded secret, but I understand it will be made public before 12 noon today.