Tory tax policy 'a mess' says Ed Balls

 

Shadow Chancellor Ed Balls has sought to step up pressure on the Government over the controversial cap on tax relief for charitable giving, describing the move as “cobbled together at the last minute”.

Mr Balls said there was a “massive outcry” against the plans, which, he said, came at a time when charities were under pressure from public spending cuts.

“If you cobble something together at the last minute and you don't think about it, you don't talk to the charities, you don't talk to the Charity Commission, it all falls apart,” he told ITV Daybreak.

“In this Budget, there have been so many things - caravans, pasties, pensioners' tax rise, charities - where the Chancellor doesn't seem to have thought it through in advance.

“Now it is a mess, really.”

He added: “At the moment out there, there are cuts to local services for elderly people, for children, and it is hospices who are saying we are going to lose funds, it is Macmillan nurses, lots of charities, saying at just the moment when our services are under pressure any way from public spending, they are now going to take away money from charities.

“What is so difficult is that the Government cut taxes for the richest people but they are taking the money away from the charities. Where is the fairness in that?”

His remarks come after David Cameron yesterday gave a strong hint that he is poised to water down the proposed cap, saying he was ready to listen to critics and take time to “get it right”.

The Prime Minister said he wanted to see more philanthropic giving to charities - something a Treasury minister conceded would fall under the plans announced by Chancellor George Osborne.

Downing Street confirmed that a full consultation is to be held over the summer on Mr Osborne's policy, which would see a limit on a range of income tax reliefs of £50,000 or 25% of income, whichever is the greater.

The Treasury has said the move, announced in the March Budget and due to be introduced through the 2013 Finance Bill, will crack down on wealthy individuals who use reliefs to minimise their tax contribution.

It released figures showing that 6% of £10 million-plus earners paid less than 10% in tax and another 3% came in below the basic 20% rate. Fewer than three-quarters paid more than 40%.

Charities have denounced the Chancellor's policy as “a shambles” and warned it would hit good causes like medical research, education and help for the vulnerable, while raising “relatively small amounts” in additional tax.

Mr Cameron is expected to be among ministers who will talk to charities and philanthropists over the coming weeks about their concerns.

Speaking in Derbyshire yesterday, he said he wanted charitable giving to increase and that “lots of things” could be done to sort out the issue.

“This was never going to introduced until next year - plenty of time to get it right, plenty of time to consult and to listen,” said the Prime Minister.

“But the key principle is - more for charities and philanthropic giving - yes.

“Allowing people to drive their tax rate down to 10% when they are some of the richest people in the country - no.”

Exchequer Secretary David Gauke fuelled charities' anxieties over the cap when he confirmed the Treasury expected it to have an impact on their incomes.

Mr Gauke said the measure was expected to bring in £300 million of additional revenue across the range of reliefs, of which between £50 million and £100 million would come from the charities cap.

The latest to join the outcry was Labour's former prime minister Tony Blair, in a long-planned speech in the United States about the role of philanthropy.

“This is absolutely the right moment for government to do all it can to promote philanthropy; and certainly nothing to harm it,” he said in a thinly-veiled swipe at the Government's plans.

Mr Blair said later that the Government should change course and do a U-turn.

“The Treasury's got a battery of measures to take against people who are avoiding their tax or abusing the tax system,” he told the News At Ten.

“But the philanthropic sector does a fantastic job and, really, in the right circumstances, it can be a great partner for government and it can often do things that government won't do.

“So I think, you know, they've gone down this route; the most sensible thing is, frankly, as I learnt in government, sometimes it's best just to do the U-turn.”

Labour leader Ed Miliband made clear his intention to keep up the pressure on the Prime Minister on the budget, by forcing a series of votes in the Commons on controversial tax measures.

Speaking during a visit to a job support service in Stratford, east London, yesterday, Mr Miliband said: “What we're seeing is a Government that is cutting taxes for millionaires through the Budget, and at the same time raising taxes on charities, pensioners and working families. I think that's the wrong thing to do.

“We've seen total incompetence from the Government. Four weeks after the Budget, they're ripping up their proposals on charity taxation. That is not the way tax policy should be conducted.

“They were desperate to cover up the 50p tax cut by having a hasty and ill thought-through measure which was apparently trying to counter tax avoidance.

“Of course we should counter tax avoidance but we must make sure it is done in a competent and fair way. The Government has failed that test.”

Chief Secretary to the Treasury Danny Alexander has said there were “attractions” in the US system, which caps relief on donations to some charities at 50%.

This was one of the options reported to be under consideration by the Chancellor. The Financial Times said Mr Osborne was also looking at the possibility of allowing donors to roll over unused tax reliefs to future years if they are used for gifts to good causes.

A Number 10 spokeswoman has said the changes set out in the Budget Red Book, which are due to be implemented through the 2013 Finance Bill, remain Government policy.

“What is in the Red Book is Government policy. It is set out,” she said.

“But there is a process in terms of how it might be implemented. That is the conversation we are now going to have with charities.

“We have yet to discuss how it will be implemented. There are various options on the table and we are going to discuss them. We have set out the broad policy and now we want to see how we are going to implement it.”

PA

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs General

Recruitment Genius: Network Support Engineer

£25000 - £30000 per annum: Recruitment Genius: A Network Support Engineer is r...

Recruitment Genius: Account Director - Tech Startup - Direct Your Own Career Path

£25000 - £40000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Telephone Sales Advisor - OTE £35,000

£18000 - £35000 per annum: Recruitment Genius: A Telephone Sales Advisor is re...

Recruitment Genius: Appointment Maker - OTE £20,000

£14000 - £20000 per annum: Recruitment Genius: An office based Appointment Mak...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent