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Last updated: July 30, 2014 12:32 pm
The shadow chancellor said the Tories had the wrong priorities and were “champing at the bit” to cut the top rate of tax for the highest earners to 40 per cent.
Speaking in Bedford, a key marginal constituency in next year’s general election, Mr Balls argued that the Conservative’s “real economic plan” is to cut taxes for the rich and hope that wealth will trickle down. Cutting the top rate from 45p to 40p would be a tax cut worth £3bn for the richest 1 per cent of the country, he said.
“We know George Osborne wanted to cut it down to 40p in his omnishambles budget two years ago. David Cameron won’t rule out doing it,” said Mr Balls. “And Boris Johnson and the right are now demanding it…The same old Tories standing up for the few, while everyone else is left behind.”
But the Labour MP faced tough questions on the BBC’s Today programme when he was asked to explain why Labour – while in government – had kept the top rate of income tax at 40p in the pound for the best part of 13 years.
He replied that Alistair Darling, the former Labour chancellor, had only lifted the top rate to 50p as part of a package of measures to tackle the deficit.
It was only fair that the most wealthy continued to take their share of the load in cutting Britain’s debts, he argued.
Labour wants to pose the same question to voters that Ronald Reagan asked Americans at the 1980 election in which he defeated President Jimmy Carter: “Are you better off than you were four years ago?”
Mr Balls produced data from the House of Commons library showing the biggest squeeze in income since the 1874-1880 parliament of the Tory prime minister Benjamin Disraeli.
He said it was the first parliament since the 1920s in which real earnings had been lower at the end than at the beginning – with average wages after inflation down by more than £1,600 since 2010. “From a Conservative-led government that promised to make working people better off back in 2010, this is a dismal record of failure,” he said.
A survey by YouGov for The Times found that only 18 per cent of respondents believed the economy was improving and on the way to recovery. A further 34 per cent thought the economy was “in a bad way but there are signs of recovery”.
Yet any further pick-up in growth does threaten to undermine the Labour narrative that households are much worse off because of the coalition.
Mr Balls said the Tories would offer more depressed wages, no proper industrial strategy and a potential exit from the European Union.
In contrast, Labour would balance the books in a fairer way, put up the minimum wage and offer tax breaks to firms that pay the living wage.
“This is the stark choice we face next year,” he said. “A choice between a Labour plan to make Britain better off and fairer for the future – with rising living standards for the many, not just a few at the top – or more of the same from the same old Tories.”
The speech is one of a series of interventions by the shadow cabinet during the coming month, designed to avoid a repeat of Labour’s lethargic August 2013.
Priti Patel, the Tory exchequer secretary to the Treasury, said: “Labour spent and borrowed their way through the good times and left us with the biggest deficit in our peacetime history.
David Cameron, meanwhile, on a tour of the northwest to meet recipients of start-up loans, said: “As part of our long-term economic plan, we are backing business and ensuring our budding entrepreneurs get the finance and support they need to kick-start and grow their businesses.”
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