Osborne refuses to rule out cutting top tax rate to 40%

Despite being repeatedly pressed by Ed Balls at Treasury questions, the Chancellor refuses to comment on whether the Tories want to reduce the top rate from 45 per cent to 40 per cent.

After the growth figures released this morning, George Osborne was always likely to enjoy his bout with Ed Balls at today's Treasury questions. So loud was the roar from the Conservative benches when Balls stood up that the Speaker was forced to interject immediately, assuring them "you've got the man at the box for whom you were waiting".

Once the Tories had settled down, Balls began his question by noting that "after three damaging years of flatlining", today's growth figures were "welcome" (prompting another roar), before challenging Osborne on the "dodgy figures" used last week to claim that living standards were rising. Osborne, in full assassination mode, welcomed the "very important Labour economic announcement" that Balls will remain "in his job" and declared, "what they need on the other side of the House is new crystal balls". As Tory MPs guffawed, an unamused shadow chancellor replied: "very good, very good, Chancellor, a joke about my name being called Balls, fabulous."

After his announcement at the weekend that Labour would reintroduce the 50p rate tax if elected, he then invited Osborne to rule out a further reduction in the rate to 40p after 2015. He said:

Let me ask the Chancellor about the one thing that he has refused to talk about now for four days. He's delivered one massive tax cut for the richest one per cent earning over £150,000 when everybody else is worse off. The Prime Minister and the Mayor of London are now saying that they want to cut the top rate of income tax again to 40p. Is that really the Conservative Party priority? If this Chancellor still believes "we're all in this together", why won't he stand up at this despatch box now and rule out another top rate tax cut from the Conservatives in the next Parliament? Come on, George, stand up and rule it out.

To this, Osborne offered a lengthy response but notably refused to even come close to ruling out another tax cut. He said:

I'll tell you the big tax cut in this parliament, it's for working people by increasing the personal allowance to £10,000. And what is clear after the last week, is that the shadow chancellor has learned absolutely nothing from the economic mess that he brought upon this country. He said Labour should have spent more money in the boom, he set out fiscal plans that would allow billions more of borrowing, and on the top rate of tax, he announced a plan that was attacked by the Labour ministers he served in government with, by the people who lend the Labour Party money, by credible business people across the country, and the costings he produced were shot down by the Institute of Fiscal Studies last night. There couldn't have been a more disastrous policy launch in the history of the modern Labour Party. And on the day that we've learned that our economy continues to grow, isn't it clear that the anti-business Labour Party is now the biggest risk to the economic recovery.

A verbose answer, as I said, but not a word on whether the top rate will be reduced again (despite loud heckling by Balls). By refusing to rule out another "millionaire's tax cut", Osborne is handing Labour a new election attack line. Not only will Labour be able to remind voters that the Tories cut taxes for the highest 1 per cent of earners, it will be able to warn them that they're prepared to do the same again. Whether or not this is good economics (and there is no evidence that a 50p rate would genuinely damage growth), it is terrible politics. As a YouGov poll reminds us today, the public overwhelmingly support the 50p rate, with 61 per cent in favour and just 26 per cent opposed. By 45 per cent to 19 per cent, they believe it will help the economic recovery rather than damage it, and, by 50 per cent to 29 per cent, that it will raise additional revenue.

Osborne is often accused of being solely influenced by political calculations, but on this issue he is allowing ideology to trump all.

George Osborne at the World Economic Forum in Davos last week. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Tony Blair might be a toxic figure - but his influence endures

Politicians at home and abroad are borrowing from the former prime minister's playbook. 

On 24 May at Methodist Central Hall, Westminster, a short distance from where he once governed, Tony Blair resurfaced for a public discussion. Having arrived on an overnight flight, he looked drawn and puffy-eyed but soon warmed to his theme: a robust defence of liberal globalisation. He admitted, however, to bafflement at recent events in the world. "I thought I was pretty good at politics. But I look at politics today and I’m not sure I understand it."

Blair lost power in the summer of 2007. In the ensuing nine years, he lost reputation. His business ventures and alliances with autocrats have made him a pariah among both the public and his party. A YouGov poll published last year found that 61 per cent of voters regarded Blair as an electoral liability, while just 14 per cent viewed him as an asset. In contrast, John Major, whom he defeated by a landslide in 1997, had a neutral net rating of zero. It is ever harder to recall that Blair won not one general election (he is the only living Labour leader to have done so) but three.

His standing is likely to diminish further when the Iraq inquiry report is published on 6 July. Advance leaks to the Sunday Times suggest that he will be censured for allegedly guaranteeing British military support to the US a year before the invasion. Few minds on either side will be changed by the 2.6 million-word document. Yet its publication will help enshrine Iraq as the defining feature of a legacy that also includes the minimum wage, tax credits, Sure Start, devolution and civil partnerships.

Former leaders can ordinarily rely on their parties to act as a last line of defence. In Blair’s case, however, much of the greatest opprobrium comes from his own side. Jeremy Corbyn inclines to the view that Iraq was not merely a blunder but a crime. In last year’s Labour leadership election, Liz Kendall, the most Blair-esque candidate, was rewarded with 4.5 per cent of the vote. The former prime minister’s imprimatur has become the political equivalent of the black spot.

Yet outside of the Labour leadership, Blairism endures in notable and often surprising forms. Sadiq Khan won the party’s London mayoral selection by running to the left of Tessa Jowell, one of Tony Blair’s closest allies. But his successful campaign against Zac Goldsmith drew lessons from Blair’s election triumphs. Khan relentlessly presented himself as “pro-business” and reached out beyond Labour’s core vote. After his victory, he was liberated to use the B-word, contrasting what “Tony Blair did [in opposition]” with Corbyn’s approach.

In their defence of the UK’s EU membership, David Cameron and George Osborne have deployed arguments once advanced by New Labour. The strategically minded Chancellor has forged an unlikely friendship with his former nemesis Peter Mandelson. In the domestic sphere, through equal marriage, the National Living Wage and the 0.7 per cent overseas aid target, the Conservatives have built on, rather than dismantled, significant Labour achievements."They just swallowed the entire manual," Mandelson declared at a recent King’s College seminar. "They didn’t just read the executive summary, they are following the whole thing to the letter."

Among SNP supporters, "Blairite" is the pejorative of choice. But the parallels between their party and New Labour are more suggestive than they would wish. Like Blair, Alex Salmond and Nicola Sturgeon have avoided income tax rises in order to retain the support of middle-class Scottish conservatives. In a speech last August on education, Sturgeon echoed the Blairite mantra that "what matters is what works".

Beyond British shores, political leaders are similarly inspired by Blair – and less reticent about acknowledging as much. Matteo Renzi, the 41-year-old centre-left Italian prime minister, is a long-standing admirer. "I adore one of his sayings,” he remarked in 2013. “I love all the traditions of my party, except one: that of losing elections."

In France, the reform-minded prime minister, Manuel Valls, and the minister of economy, Emmanuel Macron, are also self-described Blairites. Macron, who in April launched his own political movement, En Marche!, will shortly decide whether to challenge for the presidency next year. When he was compared to Blair by the TV presenter Andrew Marr, his response reflected the former prime minister’s diminished domestic reputation: “I don’t know if, in your mouth, that is a promise or a threat.”

The continuing attraction of Blair’s “third way” to European politicians reflects the failure of the project’s social-democratic critics to construct an alternative. Those who have sought to do so have struggled both in office (François Hollande) and out of it (Ed Miliband). The left is increasingly polarised between reformers and radicals (Corbyn, Syriza, Podemos), with those in between straining for relevance.

Despite his long absences from Britain, Blair’s friends say that he remains immersed in the intricacies of Labour politics. He has privately warned MPs that any attempt to keep Corbyn off the ballot in the event of a leadership challenge would be overruled by the National Executive Committee. At Methodist Central Hall, he said of Corbyn’s supporters: “It’s clear they can take over a political party. What’s not clear to me is whether they can take over a country.”

It was Blair’s insufficient devotion to the former task that enabled the revival of the left. As Alastair Campbell recently acknowledged: “We failed to develop talent, failed to cement organisational and cultural change in the party and failed to secure our legacy.” Rather than effecting a permanent realignment, as the right of the party hoped and the left feared, New Labour failed to outlive its creators.

It instead endures in a fragmented form as politicians at home and abroad co-opt its defining features: its pro-business pragmatism, its big-tent electoralism, its presentational nous. Some of Corbyn’s ­allies privately fear that Labour will one day re-embrace Blairism. But its new adherents would never dare to use that name.

George Eaton is political editor of the New Statesman.

This article first appeared in the 26 May 2016 issue of the New Statesman, The Brexit odd squad