Ed Balls speaks at the Labour conference in Brighton last year. Photograph: Getty Images.
Show Hide image

Balls calls for Osborne to scrap marriage tax allowance to fund 10p tax rate

Shadow chancellor says 10p tax rate would benefit two-thirds of married couples, while tax allowance would help just one-third.

Ahead of the Budget on Wednesday, Ed Balls has given an interview to the BBC calling on George Osborne to scrap the planned marriage tax allowance and use the money saved to introduce a 10p tax rate.

It's a smart intervention, not least because the socially liberal Osborne privately loathes the policy (for both political and economic reasons). As Balls notes, despite the broad promise to "recognise marriage" in the tax system, just a third of couples (4.1 million) will gain from the move. Eighty four per cent of the winners are men and just one in six families with children will benefit. By contrast, a 10p rate of tax would help 24 million taxpayers, including two-thirds (eight million) of married couples. 

Here's Balls's exchange with Nick Robinson: 

EB: What did he actually announce last year, he said that he would introduce a married couples allowance which, when you look at the detail, only goes to a third of married couples, and one in six families with children, it goes mainly to men. We think what we should actually do is scrap the married couples allowance which is perverse and unfair, and use that money to give a tax cut for all middle and lower income families. We propose a new 10p starting rate of income tax, it's better than the personal allowance, because it’s better for work incentives, it would help two-thirds of married couples, it would help women as well as men, families with children. Let’s cut taxes for working families, and let’s ease this cost-of-living crisis rather than carrying on pandering to Tory backbenchers with tax cuts that are unfair and don’t make sense.

NR: Let me be clear what you’re telling us, if you’re Chancellor, the marriage tax break goes?

EB: Well it goes, because let’s be honest, it doesn’t go to widows, it doesn’t go to people who’ve been left by an abusive husband, it only goes to a third of married couples, the vast majority of families with children get no benefit, get rid of that, and use that money to help all middle and lower income families struggling with the cost-of-living crisis. Fair tax cuts from Labour, not unfair tax cuts from George Osborne.

When I asked a Balls source whether the announcement meant the revenue that would be raised through a mansion tax (which Labour has pledged to introduce on properties worth more than £2m to fund a 10p rate) could be used for other measures, I was told that the party was not "de-linking 10p and mansion tax", or making a firm commitment to scrap the marriage tax allowance to help pay for the former. Rather, it is an example of a fairer choice that Osborne could make next week and an affirmation of Labour's commitment to tax cuts for the many, not the few. 

Balls is certainly right to emphasise his opposition to the marriage tax allowance, which is, as I've written before, a terrible policy. It will reduce work incentives by encouraging second earners to stay at home, further complicate the tax system and do little to support those families most in need of help. It's also, as Osborne has recognised, bad politics.

In a GQ article earlier this year, Andy Coulson described the perception that the Tories frown upon single parents as "electoral halitosis", but this policy unambiguously discriminates against them. Among those who also don't gain from the policy, as the campaign group Don't Judge My Family has noted, are widows and widowers, people who leave abusive relationships and working couples. Are liberal Conservatives really comfortable with tilting the tax system against them? The philanderer on his third marriage gains, while the hard-pressed single mother is ignored.

But under relentless pressure from Conservative backbenchers, Cameron has been forced to press ahead with a measure that will further toxify the Tory brand. 

George Eaton is political editor of the New Statesman.

Getty
Show Hide image

The SNP thinks it knows how to kill hard Brexit

The Supreme Court ruled MPs must have a say in triggering Article 50. But the opposition must unite to succeed. 

For a few minutes on Tuesday morning, the crowd in the Supreme Court listened as the verdict was read out. Parliament must have the right to authorise the triggering of Article 50. The devolved nations would not get a veto. 

There was a moment of silence. And then the opponents of hard Brexit hit the phones. 

For the Scottish government, the pro-Remain members of the Welsh Assembly and Sinn Féin in Northern Ireland, the victory was bittersweet. 

The ruling prompted Scotland’s First Minister, Nicola Sturgeon, to ask: “Is it better that we take our future into our own hands?”

Ever the pragmatist, though, Sturgeon has simultaneously released her Westminster attack dogs. 

Within minutes of the ruling, the SNP had vowed to put forward 50 amendments (see what they did there) to UK government legislation before Article 50 is enacted. 

This includes the demand for a Brexit white paper – shared by MPs from all parties – to a clause designed to prevent the UK reverting to World Trade Organisation rules if a deal is not agreed. 

But with Labour planning to approve the triggering of Article 50, can the SNP cause havoc with the government’s plans, or will it simply be a chorus of disapproval in the rest of Parliament’s ear?

The SNP can expect some support. Individual SNP MPs have already successfully worked with Labour MPs on issues such as benefit cuts. Pro-Remain Labour backbenchers opposed to Article 50 will not rule out “holding hands with the devil to cross the bridge”, as one insider put it. The sole Green MP, Caroline Lucas, will consider backing SNP amendments she agrees with as well as tabling her own. 

But meanwhile, other opposition parties are seeking their own amendments. Jeremy Corbyn said Labour will seek amendments to stop the Conservatives turning the UK “into a bargain basement tax haven” and is demanding tariff-free access to the EU. 

Separately, the Liberal Democrats are seeking three main amendments – single market membership, rights for EU nationals and a referendum on the deal, which is a “red line”.

Meanwhile, pro-Remain Tory backbenchers are watching their leadership closely to decide how far to stray from the party line. 

But if the Article 50 ruling has woken Parliament up, the initial reaction has been chaotic rather than collaborative. Despite the Lib Dems’ position as the most UK-wide anti-Brexit voice, neither the SNP nor Labour managed to co-ordinate with them. 

Indeed, the Lib Dems look set to vote against Labour’s tariff-free amendment on the grounds it is not good enough, while expecting Labour to vote against their demand of membership of the single market. 

The question for all opposition parties is whether they can find enough amendments to agree on to force the government onto the defensive. Otherwise, this defeat for the government is hardly a defeat at all. 

 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.