“We are a pro-business party,” Balls, Labour’s treasury spokesman, told BBC television today. “This is not an anti-business agenda. It is an anti-business-as-usual agenda.”
Balls announced yesterday that if elected next year, Labour would reverse the cut in the top rate made by Prime Minister David Cameron’s Conservative-led coalition. The proposal, while popular with voters, sparked opposition from business leaders, with the Institute of Directors warning it risks damaging the economic recovery.
“If the Labour Party wants to be taken seriously by business, and especially by international companies which may invest or expand in the U.K., it needs to drop its practice of knee-jerk reversion to the old socialist nostrums that so damaged Britain’s economy in the past,” said IoD Director General Simon Walker.
Foreign Secretary William Hague added his voice to the criticism today, telling the BBC that Labour is sending out the wrong message about Britain at a time when economic confidence is rising.
“Ed Balls is sending the signal that if there was a Labour government we would go back to high taxing, high borrowing, high spending, and that is an anti-business, anti-job creation agenda,” Hague said.
Balls pledged yesterday to end borrowing except for investment by 2020, and said the wealthiest should take more of the burden of deficit reduction. The top tax rate, which applies to incomes above 150,000 pounds ($247,000), was cut to 45 percent in April last year. The government said the 50 percent rate, introduced by the previous Labour administration, raised no extra revenue and discouraged investors, arguments that Labour disputes.
With the election due in May next year, Labour is seeking to convince voters it’s serious about controlling the public finances after it left office in 2010 with the deficit at a record 11 percent of economic output.
Balls ruled out further increases in the top rate under Labour, but reiterated proposals to introduce a tax on bank bonuses to help tackle youth unemployment. With further austerity needed, Labour would make cuts to social-security spending, including ending winter-fuel payments for the wealthiest pensioners as part of plans to eliminate the budget deficit “fairly,” he said.
“It’s absolutely not back to the 1980s or 1990s,” he said. “The reality is we are in very difficult circumstances and those difficult circumstances will last well into the next parliament.”
A poll for The Mail on Sunday newspaper found that 60 percent of voters backed Labour’s plan to raise the top tax rate and 40 percent disagreed it would make the rich leave Britain.
The Survation study also found that 57 percent did not believe Balls would meet his pledge to balance the books by 2020, while more people trusted Chancellor of the Exchequer George Osborne than Balls to run the economy. The poll surveyed 1,064 people yesterday afternoon.
Ball’s tax pledge is the latest in a series of announcements designed to cast Labour as the champion of ordinary voters amid what the party says is a “cost of living crisis” as inflation outpaces wage growth.
Leader Ed Miliband said this month a Labour government would limit the market share of banks in the U.K. by forcing them to sell branches to boost competition. In September, he pledged to freeze energy prices for 20 months if he wins power. Recent opinion polls give Labour a lead of about 5 percentage points over the Conservatives.
Labour is “pro-business, pro-investment, pro-market but pro-fairness,” Balls said. “Let’s get this deficit down in a fair way and make the economy work for the long term.”
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