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Labour leadership candidates and shadow chancellor divided over 50p tax rate

Chris Leslie says that he believes the issue has "moved off the agenda" in contrast to Yvette Cooper and Andy Burnham. 

By George Eaton

The 50p tax rate was one of the signature policies adopted by Ed Miliband as a means of both reducing the deficit and inequality. The totemic measure has now become one of the first to be jettisoned. In an interview with me in this week’s NS (to be published later today), new shadow chancellor Chris Leslie tells me that the issue has “moved off the agenda”. He said: “For us, everything is now under review. I personally think the priority is going to be whether the 45p rate is going to fall to 40p, so in a sense the issue of the 50p rate has now moved off the agenda. I have a feeling this is going to be a question of priorities. To me, it wouldn’t be right to cut the 45p rate at a time when the deficit is still so high and the cuts for pretty vital services are going to be so particularly deep.”

Leslie’s stance is particularly notable since it puts him at odds with Labour’s leadership candidate. Yvette Cooper and Andy Burnham have both said that they still support a 50p rate. On 31 May, Cooper told Andrew Marr: “I think it is the right thing to do right now, yes, because the deficit is still coming down, it’s still too high, it’s got to come down and as part of bringing it down we should have a fair system to do so. I think that’s about Labour values, about saying the tax system should be progressive, it should be fair and, yes, I think it was unfair for those on the highest incomes to have a huge great tax cut at a time when the deficit is still too high and needs to come down.”

On the same day, Burnham told Pienaar’s Politics: “Yvette puts it very well. And, of course, in difficult times when we do still have to get the deficit down, you have to ask people with the most to make the biggest contribution. It is absolutely right. She put it very well indeed.” Liz Kendall has said that a 50p rate should not be introduced permanently but has not rejected the policy outright. Jeremy Corbyn, meanwhile, is likely to regard as 50p rate as, if anything, too modest (I am waiting for a comment from him). 

Though Burnham has identified Rachel Reeves as his shadow chancellor-in-waiting, Leslie is the frontrunner for the post should Cooper (who he nominated) win and a candidate for the job under Kendall. His amiability and reassuring manner are regarded as assets as Labour seeks to rebuild its fiscal credibility.

But the division between Leslie and Cooper over the 50p rate raises the prospect of recreating the divide between Miliband and Alan Johnson over the issue. After becoming shadow chancellor in October 2010, Johnson continued to argue that the measure should only be temporary, in contrast to the Labour leader, who said the rate should be permanent because it was “about fairness in our society” rather than merely “reducing the deficit”. Should she win, Cooper will hope that Leslie would show greater discipline. 

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