Labour accuses Tories of planning another 'tax cut for millionaires' as George Osborne fails to rule out a cut in the top rate from 45p to 40p

 

Political Editor

George Osborne refused to rule out a cut in the top rate of tax from 45p to 40p today as the Conservatives and Labour clashed over the economy.

Labour, which announced at the weekend it would raise the top rate on earnings over £150,000 to 50p if it regains power, claimed the Tories had shown their true colours and were plotting another “tax cut for millionaires.”

In the Commons, George Osborne emphasised his tax-cutting credentials but dodged a challenge by Ed Balls to rule out another cut in the top rate, which the Chancellor reduced from 50p to 45p last year. Instead Mr Osborne claimed Labour’s tax announcement had been “disastrous” as it had been attacked by former Labour ministers.

The Chancellor is under strong pressure from Tory MPs to help people on middle incomes by raising the starting rate for the 40p higher rate tax band, which currently starts at £32,011 a year. But David Cameron has signalled that his priority would be to take more people on low incomes out of tax by raising the personal tax allowance, which rises to £10,000 a year in April.

Labour was accused of giving only a grudging welcome to yesterday’s official figures showing that the UK economy grew by 1.9 per cent in 2013. Mr Balls, the Shadow Chancellor, came under fire from Conservatives and Liberal Democrats after saying: “After three damaging years of flatlining in our economy... today's growth figures are welcome but everything we have seen today from the Chancellor shows he just does not understand for working people facing a cost of living crisis this is still no recovery at all.”

Privately, some Labour figures are worried that the party looks too negative about what is good news for the country. Yesterday’s TV bulletins omitted Mr Balls’s welcome for the growth figures and focused on his “no recovery” message.

Amid fierce clashes in the Commons, Mr Osborne told Mr Balls: “The truth is this - you welcome the economic news through gritted teeth because you didn't only say it wouldn't happen, you said it couldn't happen if we pursued our economic plan.

“You predicted jobs would be lost and a million have been created, you predicted the deficit would go up and it has come down. You predicted there would be no economic growth unless we borrowed and spent more - you have been wrong on all these things.”

In fact, all three main parties have a difficult message to get across on the economy. Yesterday Nick Clegg and Danny Alexander, the Chief Treasury Secretary, were noticeably more upbeat about the recovery than Vince Cable, the Lib Dem Business Secretary, had been in a keynote speech the previous evening. “Vince is a glass half-full man,” sighed one Lib Dem MP.

The Tories also have a delicate balancing act to perform. They worked hard yesterday to avoid looking too triumphalist about the recovery. They know that there is little sign of a “feelgood factor” in large parts of the country outside London. “Our biggest fear is a voteless recovery,” one senior Tory admitted.

There is another reason why the Chancellor does not want to crow. When growth returned last year, he was a little too keen to claim victory over Labour and had to be slightly reined in by 10 Downing Street. A “healed” economy became one that is “healing”. The present tense is required because the Tories do not want voters to think the job is done because they might then feel it is safe to back Labour. The Tories’ pitch at next year’s general election will be to say only they can “finish the job”, while warning that Labour would crash the economy (again). As Mr Osborne said yesterday: “The anti-business Labour Party is now the biggest risk to the economic recovery.”

Conservative ministers hope that Labour’s successful campaign on the “cost of living crisis” will be a diminishing asset as the growth figures get better. There are signs that Labour’s opinion poll lead is melting away, raising the Tories’ hopes that the tide is turning in their direction.

The big question is: will it really turn by May 2015? Downing Street is trumpeting its own figures showing that take-home pay rose faster than prices in 2012-13, but they have been criticised as selective by independent experts. And Labour is convinced that such claims will backfire because they insult voters, reinforcing the dangerous perception for the Tories of  being “out of touch” with ordinary people.

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Luis Suarez looks towards the crowd during the 2-1 victory over England
sport
Life and Style
Cheesecake frozen yoghurt by Constance and Mathilde Lorenzi
food + drinkThink outside the cool box for this summer’s frozen treats
News
John Barrowman kisses his male “bride” at a mock Gretna Green during the Commonwealth Games opening ceremony
peopleBarrowman's opening ceremony message to Commonwealth countries where he would be sent to prison for being gay
Sport
Sir Bradley Wiggins removes his silver medal after the podium ceremony for the men’s 4,000m team pursuit in Glasgow yesterday
Commonwealth games Disappointment for Sir Bradley in team pursuit final as England are forced to settle for silver
Sport
Alistair Brownlee (right) celebrates with his gold medal after winning the men’s triathlon alongside brother Jonny (left), who got silver
England's Jodie Stimpson won the women’s triathlon in the morning
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

SQL Report Analyst (SSRS, CA, SQL 2012)

£30000 - £38500 Per Annum + 25 days holiday, pension, subsidised restaurant: C...

Application Support Analyst (SQL, Incident Management, SLAs)

£34000 - £37000 Per Annum + excellent benefits: Clearwater People Solutions Lt...

Embedded Software / Firmware Engineer

£40000 - £45000 per annum + Pension, Holiday, Flexi-time: Progressive Recruitm...

Developer - WinForms, C#

£280 - £320 per day: Progressive Recruitment: C#, WinForms, Desktop Developmen...

Day In a Page

Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

Meet the US Army's shooting star

Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform