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Coffee House

Why Ed Balls doesn’t care about criticisms of his tax plan

3 February 2014

12:00 PM

3 February 2014

12:00 PM

There were a million people who voted Labour in the 2005 general election but not in 2010, when the party fell from a 66 majority to 48 seats behind the Tories. Thanks to the Lib Dems’ spiteful rejection of boundary changes that would have helped their coalition partners, the 2015 poll is already rigged in Labour’s favour by about 30 seats, so the number of floaters who have to be won over to give Miliband and Balls a working majority is likely to be well down in six digits rather than seven. No doubt Labour’s pollsters know how many to the nearest thousand, and have them segmented and profiled to the last housing estate.

Not many are likely to be business leaders, wealth creators, tax economists,Today listeners or Spectator readers. But as one of the party’s gurus explained to me gleefully last week, those million-minus are the only people Ed Balls needs to talk to. He doesn’t give a toss what the rest of us think of him — being hated by true blues actually helps his mission. And he doesn’t have to come up with sensible, costed policies. He just has to reach out to the electoral slice — thinner than the iceberg lettuce in the national Big Mac — that has the power to put Labour back in Downing Street. Since this obviously can’t be done by talking about their record in power, and ‘the cost of living crisis’ is rapidly running out of road, he and the other Ed think the path to victory is to persuade their chosen audience that Tories, banks, energy companies and people who prosper by their own efforts are all part of an evil conspiracy to keep everyone else poor.

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And that of course is the entire rationale behind his pledge to restore the 50p top rate of income tax. Pointless to debate whether the move would ‘bring the deficit down quicker’, because surely not even Balls himself believes it would. Pointless to shout — as Digby Jones and others have done — about discouraging inward investment and entrepreneurship, because he’s not listening. The whole issue of taxing incomes above what many experts regard as the revenue-maximising 40p top rate introduced by Nigel Lawson in 1988 has only ever been about low politics and tokenism.

When Alistair Darling announced, in November 2008, a 45p top rate on incomes above £150,000, to come into effect in April 2011, the Institute for Fiscal Studies said it would raise ‘approximately nothing’ and might even have a net negative impact. Four months later — with defeat ahead a racing certainty as Labour’s poll rating slumped to 29 per cent — Darling upped the rate to 50p and brought it forward to April 2010, barely six weeks before the general election.

It was a trick to embarrass the Tories in power, when they would naturally want to cut the rate again but could not do so without accusations of favouring the wealthy; the equivalent of leaving a different kind of floater when you think the bailiffs are about to call. How Balls must be laughing as we play his game by debating the 50p rate as though it’s a serious proposition to improve the nation’s finances: it’s really just a targeted tweet that says ‘vote for us and kick the filthy rich’.


GoveThis is an extract from Martin Vander Weyer’s column in this week’s magazine. Click here to read for free with a trial of The Spectator app for iPad and iPhone. You can also subscribe with a free trial on the Kindle Fire.

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