Support Grows For Keeping 50p Tax Rate

Politicians from Labour and the Liberal Democrats joined forces with trade unions to argue for a retention of the 50p top rate of income tax after 20 leading economists called for it to be scrapped “as soon as possible” in a letter to the FT.










Alistair Darling, the chancellor who introduced the rate in 2009, and Tim Farron, the Lib Dem president, said on Wednesday that lowering the top rate of tax would be unfair while the economy was still in difficulty.

Mr Darling said: “This has got to stay in place until we get out of the crisis. It would be grossly unfair to remove it. In the long run you have got to keep your tax rates internationally competitive which means something like the two rates we used to have. To remove it today would be grossly unfair. If they do not pay their taxes then it is poorer people who are going to pay.”

He was supported by Mr Farron, who said scrapping the 50p rate would be “phenomenally immoral and send an appalling message to the overwhelming majority of hard-working people in this country”.

Ed Balls, Labour shadow chancellor, also weighed in: “If we really are all in this together then the right priority to boost the stalled economy now should be temporarily reversing the VAT rise, which is costing families with children around £450 a year. This temporary tax cut would help to kick-start the recovery and give a much needed boost to millions of people regardless of their income.

“If the chancellor really wants to know how effective the top rate of tax is he should immediately ask the Office for Budget Responsibility, not just HMRC, to produce a report genuinely independent of government.”

Their warnings came after the Trades Union Congress also took issue with the suggestion of an immediate tax cut for top earners.

Brendan Barber, general secretary of the Trades Union Congress called the economists’ opinion “monstrously unfair”, adding: “At a time when cuts are biting hard and ordinary people are suffering the biggest squeeze on their living standards in years, the last thing we need is a handout to the wealthiest in our society.”

But DeAnne Julius, the former member of the Bank of England’s monetary policy committee and one of the signatories of the letter, defended her position to the BBC, saying many hedge funds had already moved to Switzerland and that, if marginal rates were raised on a small number of highly mobile people, “You end up not collecting the tax that you’d hoped to.”

“Only by returning to an internationally competitive tax regime will Britain enjoy long-term sustainable economic growth,” the economists say in their letter.

The signatories include many figures not usually associated with conservative causes, such as Bob Rowthorn of Cambridge University, and two former members of the Bank of England’s policy committee, Ms Julius and Sushil Wadhwani.

George Osborne, chancellor of the exchequer, is already facing pressure from the Tory right and CBI employers’ organisation to scrap the “temporary” top tax rate.

The Treasury believed that the 50p rate, introduced by the former Labour government in April 2010 on annual taxable incomes above £150,000, would eventually raise £2.7bn a year. Combined with restrictions on income tax relief for pension contributions and the abolition of the income tax personal allowance for people with annual incomes above £100,000, last year’s tax increases on the rich were designed to raise £7bn per annum.

The economists dispute these estimates, arguing the 50p rate “punishes” wealth and entrepreneurship. “It is often portrayed as a justified tax on the rich, but the economic damage it causes means that it is against the interests even of ordinary workers who don’t pay it,” they write.

Last month Mr Osborne said “there’s not much point in having taxes that are economically inefficient”. He added that the rate was uncompetitive internationally and targeted wealthy people who were already paying taxes on their capital gains.

Government officials, however, have suggested that the top rate is unlikely to be scrapped until 2013 at the earliest, when a pay freeze affecting millions of public sector workers is due to be lifted.

Nick Clegg, Liberal Democrat leader, will insist the 50p top rate can only be scrapped if other measures, such as a property or “mansion” tax, are introduced to ensure the wealthy pay their “fair share” towards cutting the deficit. The Lib Dems will also insist that the 50p rate’s abolition is accompanied by accelerated moves to raise the annual tax threshold to £10,000.

Other leading economists are more sceptical. Paul Johnson, director of the Institute for Fiscal Studies and not a signatory of the letter, said it was much too early to give up on the 50p rate: “The Treasury has been taking a punt on whether [the 50p rate] will raise money. It is taking a risk, but it is not a stupid punt.”

George Osborne Cheers Alistair Darling For Stabbing Ed Balls

It is not often that one sees a man enter the Chamber with a dagger protruding from the back of his neck. Ed Balls attempted to make light of this encumbrance, but without success.












The Tories loved reminding everyone that Mr Balls has been stabbed in broad daylight by a member of his own side. The attack was launched by the mild-mannered Alistair Darling, whose work as Labour’s last Chancellor of the Exchequer was persistently sabotaged by Mr Balls, and by Mr Balls’s patron, Gordon Brown.

Beware the vengeance of a mild-mannered man who has been treated abominably for years on end. Not since Sir Geoffrey Howe finished off Margaret Thatcher has a former Chancellor done such damage to a member of his own party as Mr Darling has done to Mr Balls.

George Osborne wasted no time, at Treasury Questions, in taking advantage of this opportunity. When Mr Balls called on the Chancellor to “repeat the bank bonus tax” imposed by Labour, Mr Osborne replied that he was not going to rely on the advice of Treasury officials, but on “the advice I’ve been given by the last Chancellor of the Exchequer”, someone Mr Balls was known to be “very close to”, namely Mr Darling, who had said the bank bonus tax would “have to be a one-off”.

This was followed by repeated references to Mr Darling’s newly published misery memoir, in which he describes how he was undermined by Mr Brown, and by the former Prime Minister’s brutal henchmen, notably Mr Balls.

Mr Osborne assured us that we are “going to be hearing a lot more” about this book. One rather doubts whether Mr Darling wanted the present Chancellor to plug his work with such enthusiasm, but it is too late now.

Mr Balls flushed, shook his head and ran his hand in a horizontal motion from side to side with the palm facing downwards: a gesture indicative of his conviction that the economy is flat-lining.

Labour MPs tried their hardest to embarrass Mr Osborne by pointing to the recent, disappointing growth figures: but the Chancellor just retaliated by pointing to Mr Darling’s memoirs.

Iain Wright (Lab, Hartlepool) attempted to change the subject by referring to Harold Macmillan as “the most successful Chancellor and Prime Minister that Eton has ever produced”, and by quoting Macmillan’s reply when asked what was most likely to blow a government off course: “Events, dear boy, events.”

Mr Osborne accused Mr Wright of “being rather unfair on Hugh Dalton who I think also went to Eton”. It is true that Dalton, who was a rather unappealing Labour Chancellor, went to Eton.

But Mr Osborne ought to have said Mr Wright was being far more unfair to William Gladstone, an Etonian whose achievements as Chancellor and Prime Minister make Macmillan’s look distinctly modest.

The trouble with Mr Osborne is that he is only really interested in the unhappy history of the period 2007-10, as related in Mr Darling’s memoir. By the time this is over we are all going to be bored rigid.

Darling To Expose 'Volcanic' Brown Government

Former Chancellor Alistair Darling is reportedly set to detail tensions within Gordon Brown's government at the height of the financial crisis in a forthcoming memoir.











Mr Brown and Mr Darling in March 2010 ahead of the General Election.

According to extracts seen by Labour Uncut, Mr Darling will claim Mr Brown's moods became increasingly "brutal and volcanic" in 2008.

'Back from the Brink: 1,000 Days at No 11' is said to detail a complete breakdown in trust between the Prime Minister and Chancellor.

Mr Darling reportedly singles out Ed Balls and Shriti Vadhera as key allies of Mr Brown, who he says were running what amounted to a parallel Treasury within Government.

He claims to have refused to have Ms Vadhera in his team, describing her as "only happy if there was blood on the floor - preferably that of her colleagues".

Alistair Darling's memoirs should give Ed Miliband some concerns about Ed Balls' suitability to be shadow chancellor.Conservative party chairman Baroness Warsi

Yvette Cooper was accepted as chief secretary to the treasury in January 2008, but Mr Darling reportedly says she was put there to "keep an eye" on him.

He also allegedly confirms the widely reported rumour that in 2009 Mr Brown tried to sack him as chancellor and offer him another junior role in cabinet.

Mr Darling threatened to walk out of government and Mr Brown, severely weakened by the economic crisis and plummeting poll ratings, relented and let him remain at No 11.

Karen Duffy, the publicity director of publisher Atlantic books, said she was unable to comment on the accuracy of the reports.











Mr Brown & Mr Balls are allegedly accused of running a parallel Treasury.

"We're not confirming or denying," she told Sky News, because the contents of the book must remain confidential because they have agreed a deal with a newspaper ahead of publication next week.

Conservative party chairman Sayeeda Warsi seized on the claims as proof that key Labour figures put party infighting above the nation's interests.

"Alistair Darling's memoirs should give Ed Miliband some concerns about Ed Balls' suitability to be shadow chancellor," she said.

"Ed Balls recently claimed that he 'did his politics on the record', but he has already been shown to have been at the heart of the plot to oust Tony Blair.

"Now Alistair Darling accuses him of running a shadow treasury operation within his own government.

"No wonder Labour left the nation's finances in such a mess when they put party political plotting above the national interest."