Ed Balls speaks at the Labour conference in 2013 in Brighton. Photograph: Getty Images.
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Balls puts the Tories on the spot over tax cuts for the rich

Shadow chancellor challenges Osborne and Cameron over failure to rule out cutting top rate from 45p to 40p. 

Labour's summer offensive (contrasting with what one shadow minister describes as last year's "summer of silence") continues today with a speech by Ed Balls on the economy in the bellwether seat of Bedford. 

Balls will reveal new figures from the House of Commons Library showing that by 2015, average earnings will have fallen by the highest amount since the 1874-1880 parliament. In addition, based on current trends, this parliament will be the first since the 1920s in which real earnings have been lower at the end than at the beginning. It's a reminder that, however fast the economy grows, Labour will still be able to go into the general election answering Ronald Reagan's question - "Are you better off than you were four years ago?" - in the negative. "From a Conservative-led government that promised to make working people better off back in 2010, this is a dismal record of failure," Balls will say.

But the most notable political line is on tax. After the success that Labour enjoyed in attacking the coalition's abolition of the 50p tax rate ("the millionaire's tax cut") in 2012, Balls will warn that the Tories are prepared to do it all over again. 

"We know the Tories' real economic plan - it's to cut taxes at the top and hope that wealth will just trickle down," he will say. 

"Having already cut taxes for millionaires in this Parliament, they're champing at the bit to do it again if they win the election - cutting the top rate of tax for people earning over £150,000 again from 45p to 40p. Another tax cut worth £3 billion for the richest one per cent of our country.

"We know George Osborne wanted to cut it down to 40p in his omnishambles Budget two years ago. David Cameron won't rule out doing it. And Boris Johnson and the right are now demanding it. This is the real Tory agenda for a second term. The same old Tories standing up for the few, while everyone else is left behind. And it shows just how much is at stake next year."

There is a simple reason why Osborne and Cameron have conspicuously failed to rule out scrapping the 45p rate: they think it would be a good idea. But whatever economic justification they can offer for this stance (and there is no evidence that a tax rate of 45p, or, indeed, one of 50p is harmful to growth), it is terrible politics. As a recent YouGov poll showed, 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.

Update: In his speech, Balls again warned that the government's failure to increase housing supply meant there was now "a real risk that interest rates will rise prematurely" to rein in the market. 

Speaking in Bedford, where Harold Macmillan first declared in 1957 "you’ve never had it so good", he also said that while the Tory PM's words "may have resonated" in post-war Britain, nearly sixty years on, every time in Prime Minister’s Questions that David Cameron tries to tell the British people that they’ve never had it so good, I fear it just prompts disbelief that he can be so out of touch.

George Eaton is political editor of the New Statesman.

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Why Labour's dismal poll ratings won't harm Jeremy Corbyn's re-election chances

Members didn't vote for him on electoral grounds and believe his opponents would fare no better.

On the day of Theresa May's coronation as Conservative leader, a Labour MP texted me: "Can you imagine how big the Tory lead will be?!" We need imagine no more. An ICM poll yesterday gave the Tories a 16-point lead over Labour, their biggest since October 2009, while YouGov put them 12 ahead. The latter showed that 2.7 million people who voted for the opposition in 2015 believe that Theresa May would make a better prime minister than Jeremy Corbyn (she leads among all voters by 52-18).

One might expect these subterranean ratings to reduce Corbyn's chances of victory in the Labour leadership contest. But any effect is likely to be negligible. Corbyn was not elected last summer because members regarded him as best-placed to win a general election (polling showed Andy Burnham ahead on that front) but because his views aligned with theirs on austerity, immigration and foreign policy. Some explicitly stated that they regarded the next election as lost in advance and thought it better to devote themselves to the long-term task of movement building (a sentiment that current polling will only encourage). Their backing for Corbyn was not conditional on improved performance among the public. The surge in party membership from 200,000 last year to 515,000 is far more worthy of note. 

To the extent to which electoral considerations influence their judgement, Corbyn's supporters do not blame the Labour leader for his party's parlous position. He inherited an outfit that had lost two general elections, neither on a hard-left policy platform. From the start, Corbyn has been opposed by the majority of Labour MPs; the latest polls follow 81 per cent voting no confidence in him. It is this disunity, rather than Corbyn's leadership, that many members regard as the cause of the party's malady. Alongside this, data is cherry picked in order to paint a more rosy picture. It was widely claimed yesterday that Labour was polling level with the Tories until the challenge against Corbyn. In reality, the party has trailed by an average of eight points this year, only matching he Conservatives in a sole Survation survey.

But it is Labour's disunity, rather than Corbyn, that most members hold responsible. MPs contend that division is necessary to ensure the selection of a more electable figure. The problem for them is that members believe they would do little, if any, better. A YouGov poll published on 19 July found that just 8 per cent believed Smith was "likely to lead Labour to victory at the next general election", compared to 24 per cent for Corbyn.

The former shadow work and pensions secretary hopes to eradicate this gap as the campaign progresses. He has made the claim that he combines Corbyn's radicalism with superior electability his defining offer. But as Burnham's fate showed, being seen as a winner is no guarantee of success. Despite his insistence to the contrary, many fear that Smith would too willingly trade principle for power. As YouGov's Marcus Roberts told me: "One of the big reasons candidates like Tessa Jowell and Andy Burnham struggled last summer was that they put too much emphasis on winning. When you say 'winning' to the PLP they think of landslides. But when you say 'winning' to today's membership they often think it implies some kind of moral compromise." When Corbyn supporters hear the words "Labour government" many think first of the Iraq war, top-up fees and privatisation, rather than the minimum wage, tax credits and public sector investment.

It was the overwhelming desire for a break with the politics of New Labour that delivered Corbyn victory. It is the fear of its return that ensures his survival. The hitherto low-profile Smith was swiftly framed by his opponents as a Big Pharma lobbyist (he was formerly Pfizer's head of policy) and an NHS privatiser (he suggested in 2006 that firms could provide “valuable services”). His decision to make Trident renewal and patriotism dividing lines with Corbyn are unlikely to help him overcome this disadvantage (though he belatedly unveiled 20 left-wing policies this morning).

Short of Corbyn dramatically reneging on his life-long stances, it is hard to conceive of circumstances in which the current Labour selectorate would turn against him. For this reason, if you want to predict the outcome, the polls are not the place to look.

George Eaton is political editor of the New Statesman.