The Staggers

The New Statesman’s rolling politics blog

Balls: extending the 50p rate is still an option

Is Ed Miliband about to fall out with another shadow chancellor?

By George Eaton Published 24 February 2011 15:50

Since he became shadow chancellor, Ed Balls has remained supremely on-message. Labour's Keynesian pitbull has kept to his promise to support Ed Miliband's plan to halve the deficit in four years and has stopped warning of a double-dip recession.

But has the first crack now appeared? In an interview in the new issue of Progress, house journal of the Blairites, Balls refuses to rule out reducing the threshold for the 50p tax rate from £150,000 to £100,000. He tells the magazine: "Those are discussions that we still have to have . . . I think [my support for a £100,000 threshold] depends. It depends very much on where we are in the future."

As I noted last month, Balls declared as much during his recent appearance on The Andrew Marr Show, but this is a far more unambiguous statement. Those Blairites who warned that he would drag Labour's economic policy to the left will be troubled today.

Balls's words also put him at odds with Miliband. The Labour leader supports a permanent 50p rate, although Alan Johnson's presence saw a greater emphasis on merely retaining it "for this parliament", but he has never publicly supported reducing the threshold to £100,000. By contrast, Balls, who supported a £100k starting rate during the Labour leadership election, is clearly a true believer in the policy.

It's worth noting that public opinion is on the shadow chancellor's side. A Sunday Times/YouGov poll published on 30 January found that 33 per cent think the top rate should eventually be brought down, 49 per cent think it should be made permanent (the Miliband position) and 51 per cent would like to see the threshold brought down to £100,000, with 29 per cent opposed. Balls will also have been encouraged by last month's bumper tax receipts, which suggest that the 50p rate may be raising more from PAYE taxpayers than first thought.

But, whatever the merits of the policy, it's troubling that Labour's taxation policy remains this ambiguous. Why haven't Miliband and Balls had this discussion yet? The party can't afford a repeat of the confusion created by Johnson.

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Tags: Ed Balls

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9 comments

Thu, 2011-02-24 17:48 — BigC (not verified)

"Balls will also have been encouraged by last month's bumper tax receipts, which suggest that the 50p rate may be raising more from PAYE taxpayers than first thought."

Since Tuesday, I note you've accepted that the self-employed tax was from 09/10 when the rate was 40%!

Still no explanation though of why PAYE would produce such a blip in January, when people will have been paying 50% since April.

Thu, 2011-02-24 19:00 — stevem1

It looks as though nothing is going to change . The Labour Party is still in thrall to the treacherous Right. There has not been a better time since 1945 for the social democratic case. Alas,the Party is still not brave enough to put it forward. I abandoned NuLab in 1997 as soon as I realised the direction it was going in. I am one of thousands of Old Labour supporters who would love to be able to vote Labour again. Not while the current attitudes prevail! I need to see a change of direction or I will sit on my hands or go somewhere else. I am seriously thinking of joining my local Green Party.

Thu, 2011-02-24 19:05 — thinkov

Stevem

change comes from the inside
get up their noses -join now

Thu, 2011-02-24 22:56 — Scotty

Millie is too scared to fall out with blinky balls - E M knew he would have problems dealing with balls, thats why E B was 3rd choice.
Watch this space, Ed wont last, either one. Too many disturbing links , deficits, lies, and now financial links to nasty arab leaders sons.

Thu, 2011-02-24 23:04 — Eddy S (not verified)

balls is well behind the curve. the highest paid 0.01% of the population make approx 60k people enough to fill man city stadium - these guys consist of lawyers, finance and mainly business people and many of them foreign and based here as well. most countries will gladly take these people with open arms and passports. this leaves the lower-tier which i think balls is targeting but slowly but surely highly skilled/paid people will also be attracted to more attractive business clusters especially with technology making it possible to work anywhere in the world, companies don't need to be here in order to sell to us. tv's, cars etc can be made elsewhere and sold here.

if balls was clever he would impose a wealth land tax i.e. a tax on static unproductive assets that wealth is attracted to. this would actually bring in more revenue then he could imagine and divert resources to more productive areas of the economy i.e. labour and capital. i would then help people on lower incomes and let anyone earn 25k tax-free that would take about 40% of the population out-of-tax altogether and make the squeezed middle disappear overnight - i would also reduce tax credits as handing out with one hand and taking from another is clearly in-efficient.