Bad policy, good politics: Ed Balls’s determination to impose his mansion tax as soon as he can puts the Conservatives in a bind

“The religion of socialism is the language of priorities,” said Nye Bevan, Labour saint and creator of the National Health Service. Now we have discovered the principal priority of one of his heirs, Ed Balls; taxing the homes of the rich. The shadow Chancellor, once so relaxed about the wealth created by the City of London, and the foreign money pouring into the capital, now tells us that the first thing he would do upon taking charge of the Treasury, presumably next May, would be to introduce a “mansion tax” on residential homes worth £2m or more. That would certainly hit investment bankers and billionaires, the vast majority inhabiting the capital’s more desirable districts.

Compare Mr Balls’s priority with Gordon Brown’s first act as Chancellor, back in 1997 – operational independence for the Bank of England. Mr Balls, in this earlier incarnation, was the Chancellor’s most powerful adviser. In helping create the Monetary Policy Committee and the rest of the modern infrastructure of inflation control, Mr Balls can claim credit for work that, at least in the first decade of its operation, saw the UK benefit from “the great moderation” – steady growth with low inflation, low interest rates, cheaper mortgages and higher living standards than would otherwise have been the case. Big stuff.

The mansion tax is a more trivial affair. Such is the financial sophistication of those likely to be affected by it that it may not even yield the modest sums Mr Balls claims for it. Britiain, after all, leads the world in tax avoidance and evasion, and our tax lawyers and accountants represent a formidable obstacle to the will of any mere democratic government. It is true that it is not possible physically to lift a Georgian townhouse and plonk it in the Cayman Islands or some other tax haven to skip a tax bill, but it is possible – demonstrably so – to create ever more exotic legal and financial ruses to avoid the tax. As with Mr Balls’s proposed restoration of the 50p rate of income tax on very high earners, it is likely, at best, to yield a few billion pounds: useful sums, but not transformative when the budget deficit is running at almost £100bn a year.

Economically, then, the mansion tax is set to be an irrelevance, and not a particularly elegant one. A revised council tax banding would be more logical, perhaps coupled with further progressive revisions to stamp duty, already embarked on by the Chancellor.

Politically, however, the mansion tax represents an artful piece of positioning. It is a vote-winner, irrespective of its merits, because it chimes so well with the current mood of impatience with the super-rich. It may or may not be “left-wing”, and it may or may not work; what it does do is paint the Coalition parties into a difficult corner.

In the case of George Osborne and the Conservatives, sticking up for those making vast profits from the vagaries of the property market will make them look like defenders of privilege, especially at a time when the poor and the middle classes alike are experiencing housing crises.

For the Liberal Democrats and Vince Cable, well, it was their policy in the first place. (As, in the more distant past, was the notion of independence for the Bank of England, once also rubbished by Labour). Having invented it, it is tricky for the Lib Dems to disown the mansion tax, even if they wanted to.

This is panto season, and Mr Balls and Ed Miliband have done well out of their attacks on the various panto villains of national life – the rail companies, privatised energy utilities, fat cats, bankers, “unscrupulous” employers recruiting migrants on low pay, tax-dodging corporations. They don’t add up to much more than ritualistic booing, but they don’t have to, if all Labour wants for Christmas is the chance of scraping into power next May.