Forget the furore over the 50p tax rate. The Tories will regret it if they underestimate the Balls/Miliband team

They’ve fought four elections navigating the hazardous politics of “tax and spend”


Not surprisingly, Ed Balls’ announcement that he would restore the top rate of tax to 50p captured the headlines. Even so, the pledge is less important than the rest of the speech, delivered last weekend, in which he committed the next Labour government to run a surplus by the end of the parliament.

The proposed tax rise tells us less than some critics have suggested. It does not symbolise the start of a relentless focus on tax increases in advance of the election. Ed Miliband and Balls are not about to embark on an act of political suicide. Both have fought four elections in which they have navigated the hazardous politics of “tax and spend”. They know the dangers, one of which is the impression that they would tax thousands of pounds away from those on middle incomes. They will not propose a single tax rise that risks being unpopular with the wider electorate. Indeed, in his first conversation with Miliband after being made Shadow Chancellor, Balls said, to his leader’s surprise, that they must start deciding on tax cuts.

The hysterical reaction of Conservative-supporting newspapers to the 50p tax rate is precisely the same as when Alastair Darling announced the same measure in his 2009 Budget. The polls now are also the same. They suggest that this is a popular tax rise. David Cameron did not choose to raise the policy in his interview on Today yesterday morning. Originally, Balls was going to make the pledge in his party-conference speech last September, but took it out so that Miliband’s proposed energy-price freeze could command the stage. On this, at least, he saw no point in delaying an announcement until nearer the election.

Balls links the tax rise to his deficit-reduction strategy, arguing that, while there is a deficit, he will need to raise more revenue from the highest earners. Newspapers might hate it, but the policy and its connection with deficit reduction is a challenge for Cameron/Osborne rather than a gift. George Osborne has won the early rounds of the “deficit” pre-election game in that it has become a debate where there is little room for nuance or rational explanation. But the Chancellor is deceiving himself if he thinks that Miliband and Balls will fall into the traps that arise from his artful framing of the narrative.

Michael Heseltine declared in the run-up to the 1997 election that Labour’s economic policies were not “Brown’s but Balls”. It was a good joke, and to some extent accurate.  Then Labour cut off the UK’s regular, mad pre-election “tax and spend” debate and just about left space for it to improve public services if it won. This is nightmarish terrain for any Labour leadership in opposition, but Miliband and Balls will not allow the Conservative leadership credibly to fight a 1992-style “tax bombshell” election. I would not be surprised if Balls proposes some tax cuts as well as a few rises that are bomb-proofed in terms of their wider popularity. When Osborne presents his bill, later this year, binding the next parliament to wiping out the deficit – a move aimed solely at trapping his opponents – Labour will almost certainly not vote against and might vote for.

Inevitably, when tiptoeing on such treacherous terrain, there are huge tactical and practical dangers for Miliband and Balls. The duo will be under constant pressure to “apologise” for Labour’s public spending record – a favourite theme of interviewers and columnists and an act of contrition also advocated by some in the shadow cabinet. They would be mad to succumb. The deficit did not cause the calamitous financial crash. The crash caused the deficit. As part of his tactically astute moves, Osborne turned a banking crisis into one about past public spending. As Miliband and Balls do not believe they spent recklessly, they would be perverse to pretend that they did in the hope this will help them. It would not.

More practically there are big risks that, as they make their defensive moves, they cut off the scope to increase much-needed spending in some areas if they win, although Balls is smartly keeping various doors slightly ajar as he did in 1997. More widely, “tax and spend” is a policy area that Labour can hope to neutralise at best. They will never command a pre-election lead on this issue in opposition. They did not even do so when Tony Blair walked on water. This is why Miliband’s big theme about failing markets is significant tactically. Without it, every interview would be on the crazy terrain, the one that bears little relation to reality: How much will that tax increase raise? What will that cut pay for?

The personal ratings of Miliband and Balls are poor. I doubt if they will improve very much before the election. But in the same way that the diaries of Labour’s cabinet ministers from the 1970s show how they greatly underestimated Margaret Thatcher, Cameron and Osborne place too much faith in their complacent misreading of Labour’s duo at  the top.

Twitter: @steverichards14

React Now

  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Recruitment Genius: Project Implementation Executive

£18000 - £23000 per annum: Recruitment Genius: They work with major vehicle ma...

Recruitment Genius: Chiropractic Assistant

£16500 per annum: Recruitment Genius: A Chiropractic Assistant is needed in a ...

Recruitment Genius: Digital Account Executive - Midlands

£18000 - £26000 per annum: Recruitment Genius: They work with major vehicle ma...

Recruitment Genius: Web Developer

£28000 - £30000 per annum: Recruitment Genius: This company provides coaching ...

Day In a Page

Read Next

Errors & Omissions: how to spell BBQ and other linguistic irregularities

Guy Keleny

South Africa's race problem is less between black and white than between poor blacks and immigrants from sub-Saharan Africa

John Carlin
NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

UK's Major Tum to blast off on a spice odyssey

Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
John Harrison's 'longitude' clock sets new record - 300 years on

‘Longitude’ clock sets new record - 300 years on

Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

Let the propaganda wars begin - again

'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
Why Japan's incredible long-distance runners will never win the London Marathon

Japan's incredible long-distance runners

Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
Why does Tom Drury remain the greatest writer you've never heard of?

Tom Drury: The quiet American

His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
You should judge a person by how they peel a potato

You should judge a person by how they peel a potato

Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Beige is back: The drab car colours of the 1970s are proving popular again

Beige to the future

Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

Bill Granger cooks with fresh cheeses

More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

Shay Given: 'This FA Cup run has been wonderful'

The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
Timeless drama of Championship race in league of its own - Michael Calvin

Michael Calvin's Last Word

Timeless drama of Championship race in league of its own