Labour’s confirmation that it would restore the top tax rate to 50p was not that much of a surprise, Ed Miliband has always been clear that was what he wanted. But it does raise an interesting question about Miliband’s attitude to the market.
Those close to the Labour leader passionately argue that his agenda is actually pro-competition and pro-market, that it not a throwback to the 1970s. As Stewart Wood wrote in these pages recently, they see him as the heir to Teddy Roosevelt. But the 50p rate will hit any successful business person regardless of how open and competitive the market they operate in is. This isn’t action to fix a broken market but a view about how much tax successful people should pay.
A consequence of Labour backing a 50p rate is that it will make it that much easier for the Tories to persuade business to be publicly critical of Miliband’s policy prospectus. Tory attendees at Davos were politely surprised at how open business people were to the idea of taking on the Labour leader in public. It will also mean that the Tories can be confident that business won’t object too loudly when they do things such as pushing for a rise in the minimum wage; business is increasingly aware of what the alternative is.
Having said all this, the policy itself is undoubtedly popular and the Tories will not relish having to defend their decision to cut the 50p rate. But I doubt that this policy will have anything like the political impact of the energy price freeze.