The real Labour divide over the 50p tax rate

Is it a temporary tax or a permanent one?

In an attempt to counter Labour's populist (and popular) pledge to reintroduce the 50p tax rate, the Tories have been quoting Lord Myners' rather colourful denunciation of the policy. The former City minister (from 2008-10) said of Ed Balls's announcement: "The economic logic behind his thinking would not get him a pass at GCSE economics", adding that "We need to encourage productive enterprise and effort rather than resort to predatory taxation. It is not clear how this is going to help the UK economy compete with the world's growth economies. The UK already has an income tax system that is more progressive than most of our international competitors."

But in opposing the policy, Myners is very much the exception that proves the rule. Almost all in Labour recognise that the 50p pledge is a smart way of proving that the party is committed to fair deficit reduction and of framing the Tories as the party of the rich. Alistair Darling, for instance, said on Sky News this morning: "I think in the context, when I increased the top rate of tax to 50p I did it on a temporary basis, I made it very clear that I didn’t see that as being a long-term position but the deficit reduction has taken far longer than anybody would want and when you talk about reducing the deficit, there are quite substantial cuts that are slated to come in after the next election and it just seems to me that we need to be fair about this so that people with the broadest shoulders carry their fair share of the burden."

But it's worth highlighting a more subtle but significant divide within the party. In his speech at the Fabian Society conference yesterday and in his apperance on The Andrew Marr Show this morning, Ed Balls said several times that the 50p rate would only remain in place "while we get the deficit down". This is designed to present the move as a temporary, pragmatic measure, rather than as a permanent feature of the tax system. Balls, who is more conscious than some in the party of the need to avoid appearing anti-business, emphasised: "I've had very many businesspeople say to me over the last year or so, they say: 'We want to get the top rate of tax down' – well, of course they do. I want lower tax rates".

But while Balls has adopted this pragmatic stance, there are many in Labour who are committed to a top rate of 50p as a matter of principle. Back in June 2010, when he was running for the Labour leadership, Ed Miliband put himself in this camp when he said:

I would keep the 50p rate permanently. It's not just about reducing the deficit, it's about fairness in our society and that's why I'd keep the 50p tax rate, not just for a parliament.

He has not repeated this declaration since but many suspect that it remains his private view. What is not in doubt is that a significant number of the party's MPs believe that the 50p rate is an essential means of redistributing income to reduce inequality, not merely of reducing the deficit.

As for whether Labour would scrap the 50p rate once deficit reduction is complete, it's worth remembering Milton Friedman's line that "Nothing is so permanent as a temporary government programme". Income tax itself was introduced in 1799 as a temporary measure to help fund the fight against Napoleon. Two hundred and fifteen years later, it is still with us.

Update: In response to this post, a Labour spokesman told me that "what is permanent is our commitment to fairness in taxation" and that "the 50p rate is specifically tied to deficit reduction". The same source added that the party would have "more to say" in the coming months about reducing tax avoidance, suggesting that it is looking at means of ensuring that it maximises revenue from the new rate.

Ed Miliband and Ed Balls at the Labour conference in Brighton last year. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Getty
Show Hide image

Rarely has it mattered so little if Manchester United won; rarely has it been so special they did

Team's Europa League victory offers chance for sorely needed celebration of a city's spirit.

Carlo Ancelotti, the Bayern Munich manager, memorably once said that football is “the most important of the least important things”, but he was only partly right. While it is absolutely the case that a bunch of people chasing around a field is insignificant, a bunch of people chasing around a field is not really what football is about.

At a football match can you set aside the strictures that govern real life and freely scream, shout and cuddle strangers. Football tracks life with such unfailing omnipresence, garnishing the mundane with regular doses of drama and suspense; football is amazing, and even when it isn’t there’s always the possibility that it’s about to be.

Football bestows primal paroxysms of intense, transcendent ecstasy, shared both with people who mean everything and people who mean nothing. Football carves out time for people it's important to see and delivers people it becomes important to see. Football is a structure with folklore, mythology, language and symbols; being part of football is being part of something big, special, and eternal. Football is the best thing in the world when things go well, and still the best thing in the world when they don’t. There is nothing remotely like it. Nothing.

Football is about community and identity, friends and family; football is about expression and abandon, laughter and song; football is about love and pride. Football is about all the beauty in the world.

And the world is a beautiful place, even though it doesn’t always seem that way – now especially. But in the horror of terror we’ve seen amazing kindness, uplifting unity and awesome dignity which is the absolute point of everything.

In Stockholm last night, 50,000 or so people gathered for a football match, trying to find a way of celebrating all of these things. Around town before the game the atmosphere was not as boisterous as usual, but in the ground the old conviction gradually returned. The PA played Bob Marley’s Three Little Birds, an Ajax staple with lyrics not entirely appropriate: there is plenty about which to worry, and for some every little thing is never going to be alright.

But somehow the sentiment felt right and the Mancunian contingent joined in with gusto, following it up with “We’ll never die,” – a song of defiance born from the ashes of the Munich air disaster and generally aired at the end of games, often when defeat is imminent. Last night it was needed from the outset, though this time its final line – “we’ll keep the red flag flying high, coz Man United will never die" – was not about a football team but a city, a spirit, and a way of life. 

Over the course of the night, every burst of song and even the minute's silence chorused with that theme: “Manchester, Manchester, Manchester”; “Manchester la la la”; “Oh Manchester is wonderful”. Sparse and simple words, layered and complex meanings.

The match itself was a curious affair. Rarely has it mattered so little whether or not United won; rarely has it been so special that they did. Manchester United do not represent or appeal to everyone in Manchester but they epitomise a similar brilliance to Manchester, brilliance which they take to the world. Brilliance like youthfulness, toughness, swagger and zest; brilliance which has been to the fore these last three days, despite it all.

Last night they drew upon their most prosaic aspects, outfighting and outrunning a willing but callow opponent to win the only trophy to have eluded them. They did not make things better, but they did bring happiness and positivity at a time when happiness and positivity needed to be brought; football is not “the most important of the least important things,” it is the least important of the most important things.

0800 7318496