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23 December 2014

Balls likely to hold early Budget if Labour win in 2015

Shadow chancellor set to act before March 2016. 

By George Eaton

Labour’s pledge to spend £2.5bn extra a year on the NHS is based on its commitment to introduce a mansion tax on property values above £2m, a windfall levy on tobacco firms and a crackdown on tax avoidance. It’s an astute policy: popular taxes to pay for the most popular public service. There’s a catch, however: since the party plans to raise the money from new measures, it won’t be available when it first takes office, creating the risk that the NHS won’t receive the promised £2.5bn in 2015-16. Jeremy Hunt has attacked Labour for “dishonesty and hypocritical posturing”, while Lib Dem health minister Norman Lamb has declared: “They have been found out. This turns out to be an attempt to deceive people.”

Ed Balls’s interview in today’s Independent is designed to rebut these charges. The shadow chancellor announces that he hopes to raise revenue from the mansion tax in the 2015-16 financial year, even though that starts a month before the general election. He says: “Saving the NHS will be at the heart of our first Budget. I would like to see that revenue coming in in the first year of a Labour government, before the end of the financial year. We will have to see the practicalities.”

This raises a new question: when would Labour’s first Budget be? Balls hasn’t yet commented on the subject but an aide told me this morning: “[It’s] unlikely we will want to wait as long as March 2016 to start getting things done.” Rather than waiting until the year after Labour takes power, Balls is likely to follow the example of other new chancellors (Geoffrey Howe, Gordon Brown, George Osborne) and deliver an “emergency” Budget (or at least one before 2016). Given the immediate policy and political objectives he would face, it’s quite possible that this could be held before the summer recess begins on 22 July 2015. 

If Labour took power without a majority, a Budget would represent one of the first tests of whether it could govern. Balls will hope that the recent experience of the Swedish Social Democrats, who fell after their Budget was defeated, isn’t repeated here.

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