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
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Life and Style
Suited and booted in the Lanvin show at the Paris menswear collections
fashionParis Fashion Week
Arts and Entertainment
Kara Tointon and Jeremy Piven star in Mr Selfridge
tvActress Kara Tointon on what to expect from Series 3
Voices
Winston Churchill, then prime minister, outside No 10 in June 1943
voicesA C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
News
i100
News
An asteroid is set to pass so close to Earth it will be visible with binoculars
news
Arts and Entertainment
Benedict Cumberbatch has spoken about the lack of opportunities for black British actors in the UK
film
News
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

Austen Lloyd: Private Client Solicitor - Oxford

Excellent Salary : Austen Lloyd: OXFORD - REGIONAL FIRM - An excellent opportu...

Austen Lloyd: Clinical Negligence Associate / Partner - Bristol

Super Package: Austen Lloyd: BRISTOL - SENIOR CLINICAL NEGLIGENCE - An outstan...

Recruitment Genius: Sales Consultant - Solar Energy - OTE £50,000

£15000 - £50000 per annum: Recruitment Genius: Fantastic opportunities are ava...

Recruitment Genius: Compute Engineer

Negotiable: Recruitment Genius: A Compute Engineer is required to join a globa...

Day In a Page

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project