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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David Cameron shows Labour how to do it

Leftwing rhetoric masked rightwing reality in Cameron's conference speech.

“The tanks are in the kitchen,” was the gloomy verdict of one Labour staffer to a speech in which the Prime Minister roamed freely into traditional left-wing territory.

But don’t be fooled: David Cameron is still the leader of an incredibly right-wing government for all the liberal-left applause lines.

He gave a very moving account of the difficulties faced by careleavers: but it is his government that is denying careleavers the right to claim housing benefit after they turn 22.

He made a powerful case for expanding home ownership: but his proposed solution is a bung for buy-to-let boomers and dual-earner childless couples, the only working-age demographic to do better under Cameron than under Labour.

On policy, he made just one real concession to the left: he stuck to his guns on equal rights and continued his government’s assault on the ridiculous abuse of stop-and-search. Neither of these are small issues, and they are a world away from the Conservative party before Cameron – but they also don’t cost anything.

In exchange for a few warm words, Cameron will get the breathing space to implement a true-blue Conservative agenda, with an ever-shrinking state for most of Britain, accompanied by largesse for well-heeled pensioners, yuppie couples, and small traders.

But in doing so, he gave Labour a lesson in what they must do to win again. Policy-wise,it is Labour – with their plans to put rocketboosters under the number of new housing units built – who have the better plan to spread home ownership than Cameron’s marginal solutions. But last week, John McDonnelll focussed on the 100,000 children in temporary accomodation. They are undoubtedly the biggest and most deserving victims of Britain’s increasingly dysfunctional housing market. But Labour can’t get a Commons majority – or even win enough seats to form a minority government – if they only talk about why their policies are right for the poor. They can’t even get a majority of votes from the poor that way.

What’s the answer to Britain’s housing crisis? It’s more housebuilding, including more social housing. Labour can do what Cameron did today in Manchester – and deliver radical policy with moderate rhetoric, or they can lose.

But perhaps, if Cameron feels like the wrong role model, they could learn from a poster at the People’s History Museum, taken not from Labour’s Blairite triumphs or even the 1960s, but from 1945: “Everyone – yes, everyone – will be better off under a Labour government”.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.