Coffee House

Ed Balls commits to return of 50p rate

25 January 2014

The overnight briefing of Ed Balls’ speech to the Fabian Society’s annual conference was that the Shadow Chancellor would make a binding fiscal commitment to balance the books, deliver a surplus on the current budget and get the national debt falling in the next Parliament. Which sounded like a mighty eleventh-hour repentance until you looked at the detail. Ed Miliband has spent the past few months trying to sound like a dry old bean counter by saying Labour wouldn’t borrow more for day-to-day spending, which really means Labour won’t borrow any more for revenue spending but can splurge all it likes on capital expenditure. And so Ed Balls has done the same today: the ‘surplus on the current budget’ is the same as ‘day-to-day spending': it’s the revenue, not the capital budget. Labour has finally worked out how to have its debate about good and bad borrowing, which is by telling anyone half-listening that they won’t borrow more, and then hope that they won’t ask whether that applies to both revenue and capital spending.

These elisions and very-carefully-worded statements are all because the Coalition has got Labour in a hole on the economy and both Balls and Miliband know it. But though Treasury ministers love nothing more than a bit of sport at the expense of Labour’s economic credibility, the one issue that the Conservatives still grow very sullen whenever it is mentioned is the scrapping of the 50p rate. It was a politically disastrous decision that even those who strongly support lower taxes thought foolish, and though it happened in 2012, it still has currency as an insult today, especially when used in juxtaposition with something like the bedroom tax or food banks. Voters who do not care much about Laffer Curves saw a government of well-off ministers helping their own.

So it makes political sense for Balls to pledge to restore it, as he has just done. But it’s also quite amusing that we’ve reached this situation. Labour had the 50p rate in place for just a few weeks before leaving office: it was introduced in Alistair Darling’s ‘nakedly political’ last Budget in 2010. And it does fit in with the direction of Labour under Miliband: a much more left-wing, big state party than we’ve seen for a long time.

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  • HJ777

    “So it makes political sense for Balls to pledge to restore it”

    Surely you mean it makes sense to pledge to restore it to 40% in line with Labour’s previous promise that it was a temporary measure?

  • HJ777

    When Labour introduced the 50p tax rate in the dying (I use the word advisedly) weeks of its government, it described it as a temporary measure.

    The current government accepted this and reduced it after a couple of years, while still leaving half the increase in place (i.e. at 45p instead of the 40p which had previously applied under Labour). Surely Labour’s next move, had they been truthful about intending it to be temporary, should be to advocate moving it back down to 40p in line with what they said at the time they introduced the 50p rate.

    So I don’t understand Labour’s position. Surely they weren’t lying about wanting it to be temporary?

  • Peter Stroud

    Surely the voters won’t fall for this blatant show of old labour class warfare.

  • Wessex Man

    Brilliant what you can do with a bit of enhancing here and there wheres his thirty six pack gone?

  • Tim Reed

    Wasn’t the top rate set at 40% throughout most of Labour’s 13 years in government? I believe it was only raised to 50p months before Brown and his band of crooks and gangsters were thrown out of office. In other words, a quintessential piece of Brownite cynicism – not done in the national interest, but purely to set a trap for his successors.

    Don’t expect the BBC to ever point out that the wealthy now pay more under this Conservative led coalition than they did under almost all of Labour’s reign of destruction. “Tories oppose Labour’s tax on millionaires”.

  • Doggie Roussel

    Ed Gonads… the most completely perfect template for a 21st century Labour politico… utterly devoid of credibility, integrity or intelligence and with dwarf of a wife who makes the Gorgons look like Florence Nightingale.

    Let’s hope these couple of abominations stick around long enough to ensure the scuppering of HMS Socialist…

    Offshore tax havens must be rubbing their hands together at the prospect of a Labour windfall.

  • manonthebus

    Apparently spending on investment will be OK. Unfortunately, I clearly remember that Gordon Brown and his cohorts always referred to money spent on the NHS as ‘investments’. So that’s their ‘get-out’ clause obviously.

  • Smithersjones2013

    So it makes political sense for Balls to pledge to restore it

    Not really because at the time people were suffering financially. It was the timing of the reduction that was crass. The mood of the nation was rather bleak then. Not only that but doing it at the same time as clamping down on Caravans and Pasties made it look particularly crass. If Osborne had waited and done it this year in the budget (having seen the income tax allowance rise significantly in the interim ) then I suspect it would have been far less of an issue.

    Therefore by the time Balls imposes the increase I suspect the 4th rule of politics to apply:

    Tax Cuts GOOD

    Tax Increases BAD, VERY BAD INDEED.

    Especially ones that will drive high earning celebrity types like football stars out of the country (just look whats happened in France).. They may be pampered spoilt brats but they are currently OUR pampered spoilt brats.

  • ButcombeMan

    Is Balls mentally fit, to be Chancellor?
    (serious question)

    • Ron Todd

      No (serious answer)

      • Alan Douglas

        He’s as fit as the most successful Labour chancellor of the past 17 years was. Namely the Broon terror.

      • Nicholas chuzzlewit

        Aghhh! Beat me to it.

      • ButcombeMan

        He really worries me, I sat through the whole rambling speach. He has all the body language and mannerisms of somone in deep inner turmoil. Lots of what he said incoherent rambling platitudes. Moon landings and Blackberries at one stage.
        I think he is very deeply stressed. The whole drama surrounding the speach not justified by what he had to say.

    • Smithersjones2013

      When are any of the Labour Party (especially Miliband’s misfits) mentally fit to be in Government (the last lot certainly weren’t)?

  • HookesLaw

    You are correct to point out Balls’ lie about supposedly ba;ancing the budget. it is clear as day to to evemn the most idiotic loon that deficits and debt will never disappear under labour.
    This screams out from Balls’ comments.

  • RavenRandom

    I don’t believe the same Labour cretins who spent us into a hole are the people who will restore balance to the budget. Indeed by deciding a pound spent on capital is different to a pound of revenue Balls shows his specious nature, his economic illiteracy, desire to mislead and frankly naked fat hunger for power. This is just spending dressed up as Brown’s “Labour investment” again.
    They seek to ruin us, to finish the job with state intervention and higher taxes (that I do believe), then finally usher in the IMF.

    • telemachus

      Bloated asset rich folk should not only be taxed at 50% on income but subject to a 1% year on year asset tax of assets over a million

      • Joff

        What a cracking idea. They could call it ‘The Daylight Robbery Act 2015′

        • telemachus

          The egalitarian bill

          • David Kay

            Great idea telemachus, youre a one man UKIP recruiting band. Keep up the good work!

      • RavenRandom

        Why? Because they were successful? Because you’re a spiteful envious moron? Because theft is in your nature?

        • telemachus

          No because it is morally wrong for their to be such disparity in sharing out the nations wealth

          • RavenRandom

            Morally wrong. Definitionally unprovable to start with. If you’ve already paid tax on assets, why be taxed again? I assume that if the Govt decided to equally share Britain’s wealth and took half your assets to give to poor Congolese people you’d be fine with that?

          • Colonel Mustard

            “sharing out the nation’s wealth”.

            It is not the nation’s wealth to ‘share’. It is the wealth created by people who work and it is taken from them under duress to fund an over large state full of meddling politicians and bureaucrats.

            • telemachus

              It is incumbent on us all to look after our Brothers. We should enforce the traditions on which this country has grown rather than to have them harmed; we should carry out the guaranties of the Magna Carta, as interpreted by our forefathers who wrote them and who gave them to us; we should adhere to the works and compacts of the Methodist forbears taken from the Laws of God, from and imbue in our Government again that spirit of liberty, justice, and mercy which they inspired in those who laid the foundations of our industrial greatness in the days when they gave life and hope to our country. God has beckoned fullness and peace to our land; our forefathers have set the guide stakes so that none need fail to share in this abundance. Will we now have our generation, and the generations which are to come, cheated of such heritage because of the greed and control of wealth and opportunity by the revanchists who currently rule us.
              We will unless we act

              • Colonel Mustard

                Pure mischievous provocation as expected. Charity is charity and cannot be coerced. Theft is theft. When there are no multi-millionaire champagne socialists braying about inequality or Labour MPs cheating the taxpayer (q.v. Balls and Cooper ‘flipping’) I might listen to your tripe.

                Meanwhile, H**l will probably freeze over.

                • telemachus

                  When some one strips a man of his clothes we call him a thief. And one who might clothe the naked and does not—should not he be given the same name? The bread in your hoard belongs to the hungry; the cloak in your wardrobe belongs to the naked; the shoes you let rot belong to the barefoot; the money in your vaults belongs to the destitute. All you might help and do not—to all these you are doing wrong

                  —Basil of Caesarea from the The Rich Fool.

              • HJ777

                Doesn’t Magna Carta protect property and other rights against arbitrary government power?

      • 2trueblue

        Well that would include your friends Balls and Millipede for starters.

  • Thatcherite Lee

    And with that he’s just improved the economy of at least two parts of the planet. Switzerland and The Cayman Islands will be grateful.

    • BarkingAtTreehuggers

      And there was me thinking the Isle of Man was the preferred location for family trust funds.

      • Nicholas chuzzlewit

        Well with that knowledge you are now marginally less stupid.

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