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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Vince Cable will need something snappier than a graduate tax to escape tuition fees

Perhaps he's placing his hopes in the “Anti Brexit People’s Liberation Front.” 

“We took power, and we got crushed,” Tim Farron said in what would turn out to be his final Autumn conference as Liberal Democrat leader, before hastening on to talk about Brexit and the need for a strong opposition.

A year and a snap election later, Vince Cable, the Lib Dem warhorse-turned-leader and the former Coalition business secretary, had plenty of cracks about Brexit.

He called for a second referendum – or what he dubbed a “first referendum on the facts” – and joked that he was “half prepared for a spell in a cell with Supreme Court judges, Gina Miller, Ken Clarke, and the governors of the BBC” for suggesting it".

Lib Dems, he suggested, were the “political adults” in the room, while Labour sat on the fence. Unlike Farron, however, he did not rule out the idea of working with Jeremy Corbyn, and urged "grown ups" in other parties to put aside their differences. “Jeremy – join us in the Anti Brexit People’s Liberation Front,” he said. The Lib Dems had been right on Iraq, and would be proved right on Brexit, he added. 

But unlike Farron, Cable revisited his party’s time in power.

“In government, we did a lot of good and we stopped a lot of bad,” he told conference. “Don’t let the Tories tell you that they lifted millions of low-earners out of income tax. We did… But we have paid a very high political price.”

Cable paid the price himself, when he lost his Twickenham seat in 2015, and saw his former Coalition colleague Nick Clegg turfed out of student-heavy Sheffield Hallam. However much the Lib Dems might wish it away, the tuition fees debate is here to stay, aided by some canny Labour manoeuvring, and no amount of opposition to Brexit will hide it.

“There is an elephant in the room,” the newly re-established MP for Twickenham said in his speech. “Debt – specifically student debt.” He defended the policy (he chose to vote for it in 2010, rather than abstain) for making sure universities were properly funded, but added: “Just because the system operates like a tax, we cannot escape the fact it isn’t seen as one.” He is reviewing options for the future, including a graduate tax. But students are unlikely to be cheering for a graduate tax when Labour is pledging to scrap tuition fees altogether.

There lies Cable’s challenge. Farron may have stepped down a week after the election declaring himself “torn” between religion and party, but if he had stayed, he would have had to face the fact that voters were happier to nibble Labour’s Brexit fudge (with lashings of free tuition fees), than choose a party on pure Remain principles alone.

“We are not a single-issue party…we’re not Ukip in reverse,” Cable said. “I see our future as a party of government.” In which case, the onus is on him to come up with something more inspiring than a graduate tax.

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.