Balls’s smart move on VAT

Ed Balls’s decision to oppose any rise in VAT is smart politics and smart economics.

Ed Balls's bold claim that ruling out a rise in value-added tax would have saved Labour from defeat in the election is rather wide of the mark. With the electorate inherently sceptical of tax pledges by politicians, such a promise would never have shifted many votes.

But there was then and is now a principled argument for opposing any rise in this most regressive of taxes. By staking out a clear position ahead of next week's emergency Budget, Balls has invited his rival leadership candidates to follow suit.

I'd be surprised if the coalition chose to raise VAT this early in its lifetime, but with the new Office for Budget Responsibility poised to downgrade Labour's growth forecasts, George Osborne might believe he has found a justification.

In fact, should growth be weaker than expected, few responses could be worse than increasing VAT. A rise in the tax would not only hit the poorest, who spend a disproportionate amount of their income on basic goods, hardest, it would also suck vital demand out of the economy.

A recent report for the Centre for Retail Research found that raising the VAT rate to 20 per cent would cost each household £425 a year on average. It added that the resultant drop in consumer spending could cost 47,000 jobs and lead to the closure of almost 10,000 stores.

Balls doesn't cite these figures, but he is right when he argues:

It would be economic madness to raise VAT -- on top of the spending cuts the government has announced. Raising VAT will either depress spending and stifle growth, increase prices and stoke inflation, or be absorbed by the struggling retail sector.

But as well as being smart economics, opposing a rise in VAT is smart politics. Along with electoral reform, tax is one of the most potentially disruptive internal tensions within the coalition.

Should the government raise VAT while backtracking on its plan to increase capital gains tax significantly, Balls's intervention will look prescient.

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George Eaton is political editor of the New Statesman.

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Labour to strip "abusive" registered supporters of their vote in the leadership contest

The party is asking members to report intimidating behaviour - but is vague about what this entails. 

Labour already considered blocking social media users who describe others as "scab" and "scum" from applying to vote. Now it is asking members to report abuse directly - and the punishment is equally harsh. 

Registered and affiliated supporters will lose their vote if found to be engaging in abusive behaviour, while full members could be suspended. 

Labour general secretary Iain McNicol said: “The Labour Party should be the home of lively debate, of new ideas and of campaigns to change society.

“However, for a fair debate to take place, people must be able to air their views in an atmosphere of respect. They shouldn’t be shouted down, they shouldn’t be intimidated and they shouldn’t be abused, either in meetings or online.

“Put plainly, there is simply too much of it taking place and it needs to stop."

Anyone who comes across abusive behaviour is being encouraged to email validation@labour.org.uk.

Since the bulk of Labour MPs decided to oppose Labour leader Jeremy Corbyn, supporters of both camps have traded insults on social media and at constituency Labour party gatherings, leading the party to suspend most meetings until after the election. 

In a more ominous sign of intimidation, a brick was thrown through the window of Corbyn challenger Angela Eagle's constituency office. 

McNicol said condemning such "appalling" behaviour was meaningless unless backed up by action: “I want to be clear, if you are a member and you engage in abusive behaviour towards other members it will be investigated and you could be suspended while that investigation is carried out. 

“If you are a registered supporter or affiliated supporter and you engage in abusive behaviour you will not get a vote in this leadership election."

What does abusive behaviour actually mean?

The question many irate social media users will be asking is, what do you mean by abusive? 

A leaked report from Labour's National Executive Committee condemned the word "traitor" as well as "scum" and "scab". A Labour spokeswoman directed The Staggers to the Labour website's leadership election page, but this merely stated that "any racist, abusive or foul language or behaviour at meetings, on social media or in any other context" will be dealt with. 

But with emotions running high, and trust already so low between rival supporters, such vague language is going to provide little confidence in the election process.