Labour should get behind Balls's VAT cut

The party must not miss a chance to redefine the economic debate.

Ed Balls's bold call for a temporary cut in VAT has not received the support that it deserves. On The Daily Politics earlier today, Alistair Darling refused to endorse the plan and Labour has failed to rebut George Osborne's claim that a temporary reduction to 17.5 per cent would cost £52bn.

The FT, which claims that Balls failed to brief the shadow cabinet on his plan, reports one member as saying: "The problem is that it is playing to our weaknesses and creates the impression that we can't face up to tough decisions."

It's a pity that so many others share this view. Balls's call for a VAT cut was a chance for Labour to redefine the parameters of the economic debate and to regain the initiative from the Tories. As I blogged last week, contrary to Osborne's claim that the measure is "unfunded", there is much evidence that a cut in VAT would pay for itself. Mark Littlewood, the director of the Institute of Economic Affairs and no friend of Balls, agrees with this. He tweeted earlier today: "in the odd position of agreeing with Ed Balls rather than the PM on VAT. 20% is quite possibly on "wrong side" of the Laffer curve." It's exactly these sorts of arguments that ministers need to be making. A temporary VAT cut would boost consumer confidence, lower inflation (thus reducing the risk of a premature rate rise), protect retail jobs and increase real wages, meaning it would likely be self-funding.

History teaches us that tax cuts can change the political weather. It was George Osborne's populist pledge to raise the inheritance tax threshold to £1m that persuaded Gordon Brown not to call an early election. Labour must not miss an opportunity to prove that it, not the Tories, is on the side of consumers.

George Eaton is political editor of the New Statesman.

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Emmanuel Macron can win - but so can Marine Le Pen

Macron is the frontrunner, but he remains vulnerable to an upset. 

French presidential candidate Emmanuel Macron is campaigning in the sixth largest French city aka London today. He’s feeling buoyed by polls showing not only that he is consolidating his second place but that the voters who have put him there are increasingly comfortable in their choice

But he’ll also be getting nervous that those same polls show Marine Le Pen increasing her second round performance a little against both him and François Fillon, the troubled centre-right candidate. Her slight increase, coming off the back of riots after the brutal arrest of a 22-year-old black man and Macron’s critical comments about the French empire in Algeria is a reminder of two things: firstly the potential for domestic crisis or terror attack to hand Le Pen a late and decisive advantage.  Secondly that Macron has not been doing politics all that long and the chance of a late implosion on his part cannot be ruled out either.

That many of his voters are former supporters of either Fillon or the Socialist Party “on holiday” means that he is vulnerable should Fillon discover a sense of shame – highly unlikely but not impossible either – and quit in favour of a centre-right candidate not mired in scandal. And if Benoît Hamon does a deal with Jean-Luc Mélenchon – slightly more likely that Fillon developing a sense of shame but still unlikely – then he could be shut out of the second round entirely.

What does that all mean? As far as Britain is concerned, a Macron or Fillon presidency means the same thing: a French government that will not be keen on an easy exit for the UK and one that is considerably less anti-Russian than François Hollande’s. But the real disruption may be in the PR battle as far as who gets the blame if Theresa May muffs Brexit is concerned.

As I’ve written before, the PM doesn’t like to feed the beast as far as the British news cycle and the press is concerned. She hasn’t cultivated many friends in the press and much of the traditional rightwing echo chamber, from the press to big business, is hostile to her. While Labour is led from its leftmost flank, that doesn’t much matter. But if in the blame game for Brexit, May is facing against an attractive, international centrist who shares much of the prejudices of May’s British critics, the hope that the blame for a bad deal will be placed solely on the shoulders of the EU27 may turn out to be a thin hope indeed.

Implausible? Don’t forget that people already think that Germany is led by a tough operator who gets what she wants, and think less of David Cameron for being regularly outmanoeuvered by her – at least, that’s how they see it. Don’t rule out difficulties for May if she is seen to be victim to the same thing from a resurgent France.

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.