Budget 2010: Darling's new tax rises

The nice little earners Darling is planning for today's Budget.

As Alistair Darling prepares to battle his way across a picket line to deliver the Budget, what new information can we expect on tax rises and spending cuts?

The huge cuts to public spending (£38bn) needed to halve the deficit by 2013-2014 won't be unveiled until after the election, and ministers insist that previously announced tax rises will raise £19bn in new revenue.

But last week Peter Mandelson broke ranks to admit that further tax rises may in fact be necessary, and we're likely to learn of some of them today.

It looks like Darling has resisted pressure from cabinet colleagues, including Ed Balls, to reduce the threshold for the new 50p tax rate from £150,000 to £100,000, but new tax rises on the rich can't be ruled out.

It also looks like our old friend "fiscal drag" -- not adjusting tax thresholds for inflation -- will be making an appearance.

If adjusted for inflation, the personal allowance should rise to £6,669, but freezing it at £6,475 will bring in an extra £1bn for the Treasury and mean an extra £40 in tax for every taxpayer.

Darling is also expected to freeze the threshold for the 40p rate at £43,875, rather than raise it in line with inflation to £44,995, netting the Treasury an extra £450m.

Elsewhere, the FT reports that the banks will face "new taxes" and that Darling will confirm the government's support for a global bank levy.

Labour's deficit reduction plan, based on a ratio of 67 per cent spending cuts to 33 per cent tax rises, is currently the most progressive (the Tories favour an 80:20 split and the Lib Dems -- remarkably -- support a 100:0 ratio) and it'll be worth watching to see if the tax element of that rises today.

Meanwhile, I wonder how full the Labour benches will be this afternoon. A number of MPs from the left of the party are planning to miss the Budget rather than cross the PCS picket lines.

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George Eaton is political editor of the New Statesman.

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How tribunal fees silenced low-paid workers: “it was more than I earned in a month”

The government was forced to scrap them after losing a Supreme Court case.

How much of a barrier were employment tribunal fees to low-paid workers? Ask Elaine Janes. “Bringing up six children, I didn’t have £20 spare. Every penny was spent on my children – £250 to me would have been a lot of money. My priorities would have been keeping a roof over my head.”

That fee – £250 – is what the government has been charging a woman who wants to challenge their employer, as Janes did, to pay them the same as men of a similar skills category. As for the £950 to pay for the actual hearing? “That’s probably more than I earned a month.”

Janes did go to a tribunal, but only because she was supported by Unison, her trade union. She has won her claim, although the final compensation is still being worked out. But it’s not just about the money. “It’s about justice, really,” she says. “I think everybody should be paid equally. I don’t see why a man who is doing the equivalent job to what I was doing should earn two to three times more than I was.” She believes that by setting a fee of £950, the government “wouldn’t have even begun to understand” how much it disempowered low-paid workers.

She has a point. The Taylor Review on working practices noted the sharp decline in tribunal cases after fees were introduced in 2013, and that the claimant could pay £1,200 upfront in fees, only to have their case dismissed on a technical point of their employment status. “We believe that this is unfair,” the report said. It added: "There can be no doubt that the introduction of fees has resulted in a significant reduction in the number of cases brought."

Now, the government has been forced to concede. On Wednesday, the Supreme Court ruled in favour of Unison’s argument that the government acted unlawfully in introducing the fees. The judges said fees were set so high, they had “a deterrent effect upon discrimination claims” and put off more genuine cases than the flimsy claims the government was trying to deter.

Shortly after the judgement, the Ministry of Justice said it would stop charging employment tribunal fees immediately and refund those who had paid. This bill could amount to £27m, according to Unison estimates. 

As for Janes, she hopes low-paid workers will feel more confident to challenge unfair work practices. “For people in the future it is good news,” she says. “It gives everybody the chance to make that claim.” 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.