Ed Balls criticises the government’s new tax reforms that have come into effect on Saturday
Ed Balls criticises the government’s new tax reforms that have come into effect on Saturday
Shadow chancellor claims gains from £10,000 personal allowance ‘swamped’ by higher VAT and cuts to tax credits
Families with children where one parent works will be hardest hit by new tax changes that come into force on Saturday, according to shadow chancellor Ed Balls, who says gains from a higher personal allowance of nearly £10,000 are “swamped” by higher VAT and cuts to tax credits.
Balls said prime minister David Cameron had prioritised tax cuts for millionaires over “squeezed” workers after new figures commissioned by the Labour party from the Institute for Fiscal Studies show that a one-earner family with children will lose an average of just under £4,000.
The thinktank’s data shows that a couple with children, where one parent works, will be worse off by £3,995.65 a year on average after the tax and benefit changes introduced since 2010. Average households will be worse off by £891 a year.
Balls highlights a series of changes that will be introduced with the start of the new financial year. These include a freeze in child benefit for a third year and an increase in tax credits by just 1%. The personal allowance will increase to £9,440 although the higher threshold will fall to £41,450 to help pay for this.
Labour argues the figures show the government has the wrong priorities because the tax changes include a cut in the top rate of income tax from 50p to 45p. This will give 13,000 people who earn more than £1m an average tax cut of £100,000. The change will benefit 267,000 people earning £150,000-plus a year.
The shadow chancellor said: “These figures show the full picture David Cameron and George Osborne do not want you to see. They reveal that any gains ministers boast about from the rise in the personal allowance are swamped by higher VAT, cuts to tax credits and child benefit. “
The IFS data shows that lone parents will also be hit by the changes. A lone parent in work will be worse off by £1,225.95 a year while a lone parent out of work will lose £1,206.50. Couples with children where both parents work will be worse off by £1,869.09 while a similar couple with no children will lose £672.10.
Shadow chancellor says he was doing 56mph in 50mph zone and attended speed awareness course
Ed Balls has confessed to being caught speeding – saying that he was “bang to rights”.
The shadow chancellor said he was doing 56mph in a 50mph zone on the motorway in his West Yorkshire constituency when he triggered a trap.
Joking that he had been going “too far, too fast” – a favourite attack line against the coalition’s austerity measures – Balls said he had paid a fine and attended a speed awareness course rather than accept penalty points.
“Like many local people, I was caught out by the never-ending roadworks on the M62. Pulling on to the motorway at Morley I realised too late that the speed restrictions were still in place,” the Labour MP wrote on his blog.
“I was caught and bang to rights – doing 56 in a 50 mile restriction zone. Going too far, too fast, you might say.
“I paid my fine and chose to attend a speed awareness course. I currently have no points on my licence and would like to keep it that way. Which is why, this week, I ended up in the Holiday Inn with 39 others.
“The course was very professional and actually really worthwhile. What hit home were the statistics which link speed to car deaths. At 20mph, less than 10% of people will lose their lives if hit by a car. But the probability rises exponentially, going above 40% at 40mph.
“Our course instructors explained that casualty rates have fallen over the past decade, as drivers have become more aware and car design has improved. The worrying thing is that this trend has started to reverse in recent years.”
Balls insisted the experience had reinforced his determination to get more 20mph zones on busy roads in the area.
Ed Balls calls Osborne’s comments ‘the cynical act of a desperate chancellor’
George Osborne was accused of a demeaning attempt to use the killing of six children by Mick Philpott to bolster the Conservatives’ case that the welfare state is subsidising inappropriate lifestyles.
In what is turning into a bitter row over welfare reform, Labour accused the chancellor of overstepping the boundary of decency by implying there is a connection between welfare and the crimes committed by Philpott.
A judge at Nottingham crown court yesterday gave Philpott a life sentence, for the killing of his children in a house fire, saying he should serve a minimum of 15 years in jail.
Ed Balls, the shadow chancellor, in probably his strongest worded personal assault on Osborne, said: “Chancellors have to think very carefully before they comment on the issues of the day. How they do so says a lot about the character of their chancellorship.
“That is why I believe George Osborne’s calculated decision to use the shocking and vile crimes of Mick Philpott to advance a political argument is the cynical act of a desperate chancellor. For the chancellor to link this wider debate to this shocking crime is nasty and divisive and demeans his office.”
Osborne’s remarks follow explicit calls from the rightwing media and some Tory MPs to cut back on child benefit for larger families.
After making a speech on welfare this week, Osborne said during a visit to Derby that there were wider lessons from Philpott’s behaviour. “Philpott is responsible for these absolutely horrendous crimes and these are crimes that have shocked the nation; the courts are responsible for sentencing him. But I think there is a question for government and for society about the welfare state – and the taxpayers who pay for the welfare state – subsidising lifestyles like that, and I think that debate needs to be had.”
The Conservatives said his remarks were legitimate comment and followed reports that Philpott was able to claim along with his partners £54,253 annually through child benefit.
But Labour claimed they were intentionally divisive remarks that seek to build popular support for the welfare cuts being imposed this week by using a wholly exceptional case to demonise claimants.
The Daily Mail earlier had said Philpott bred the children to “milk” the benefits system and said he “embodies everything that is wrong with the welfare state”.
The Times also said it was “time to look again at [work and pensions secretary] Iain Duncan Smith’s suggestion that child benefit be capped or limited to the first two children. That would simply be to apply the rules that govern the conduct of everyone else.”
The proposal to cap child benefit was blocked by the Liberal Democrats and may now be revived in the Tory election manifesto. Labour is acutely aware that popular opinion is largely fed up with what it regards as a something-for- nothing culture, although figures from the Department of Work and Pensions and obtained through a freedom-of-information request, show that there are just 180 families in Britain with more than 10 children who are dependent on benefits.
Child benefit has already been withdrawn from higher rate taxpayers. It is paid at £20.30 a week for the eldest child and an additional £13.40 for every subsequent child.
David Davis, the leading Conservative rightwing MP, said it was unwise to build a policy on a single case, but claimed that as many as one or two in 100 parents were having an extra child due to the prospect of child benefit.
Balls said: “Millions of people, including pensioners and the disabled, people in work and out of work, receive benefits and tax credits. They will be as shocked and disgusted by the callous killing of these children as anyone else in Britain.”
The Liberal Democrat MP Julian Huppert also condemned attempts to blame the deaths on the welfare state. He said “Mick Philpott’s behaviour was clearly awful, and he deserved the sentence he got. However, it is completely misleading to blame his actions on the welfare state.”
Shadow chancellor Ed Balls admits his condition sometimes ‘got the better of him’ when he faltered in his response to George Osborne’s autumn statement
Although I don’t think it was the reason the shadow chancellor was being laughed at, as a stammerer I respect his courage
On Wednesday, Ed Balls, the shadow chancellor, had a bad day at the office. Shock, horror: he stammered during his response to George Osborne’s autumn statement. Cue gasps, backs of hands to foreheads, and tut-tutting with a wrinkled-chin shake of the head. You know what I thought? I thought “big deal” – and I’m sure he did too. Or he would have thought that, had he not been made to defend himself when questioned about it.
On Thursday morning, on the BBC Radio 4′s Today programme, Sarah Montague asked Balls whether he defended his “performance” in the Commons “in political terms”. She later asked whether he “did [his] job well enough yesterday”. It was in response to this that Balls raised his stammer, explaining that, for the first couple of minutes when he begins speaking, he sometimes has a little trouble before he gets into his stride – especially with 300 MPs trying to shout him down.
Listening to him defend his position and talk about his stammer on the programme without a trace of self-pity, my first instinct was to give “Bruiser” Balls a massive hug; partly out of thanks. As a lifelong (and much more severe) stammerer myself, one who has for years been affected by prejudice and bigotry, it was almost with a sense of pride that I welcomed his acknowledging this with a firm, dignified handshake.
I can’t think of many more difficult audiences than the rowdy rabble that inhabits the House of Commons. There’s no doubt that one has to have an iron will to stand one’s ground against some of the vitriol that gets bandied around the chamber.
But the key thing is that, by and large, this vitriol is usually nothing personal. Call me naive, but I actually believe Osborne when he said that the laughter in response to Ed Balls’ statement was nothing to do with his stammer. I’ve watched the clip countless times now, and it seems clear to me that the laughter that erupted was not because of his block per se, but because it unfortunately occurred when he accidentally said that, “the national debt is NOT rising … er, is rising, is not falling … I’ll say that again … “. So he initially said the opposite of what he meant. In fact, if you watch the clip, you’ll see Ed Miliband flinch as a result of the error.
Obviously, it is vital that we all act in a civilised and sensitive way when it comes to equality and disability awareness, but it’s important we don’t get carried away to the extent that we get distracted from the main point. The fact is, however unfortunate it may have been, Balls did start off by saying the opposite of what he meant. This alone can send a stammerer into an internal frenzy. So while I don’t believe the laughter did have anything to do with his stammer, I do commend Balls for doing such a remarkable job at regaining and retaining his composure.
When flummoxed, my stammer can go into machine-gun-with-a-cork-in-it mode. Or, if you prefer a water-based analogy, it’s like the first time you use a garden hose in the spring after it’s been sitting under a ladder in the shed all winter. It splutters, sprays, explodes … and then finally calms down.
In the eyes of most decent and sensitive people – and particularly in the eyes of stammerers – to do Balls’s job with (and in spite of) a speech impediment is immensely courageous. And for that, I salute him.
Chancellor heads off backbench rebellion as economic secretary says government is ‘determined’ to help struggling households
George Osborne averted a Tory backbench rebellion in the Commons on Monday when the Treasury gave a powerful hint that the government could defer a planned 3p increase in fuel duty.
A Labour bid to delay the increase until at least April was defeated by 282 votes to 234, a government majority of 48.
Sajid Javid, the economic secretary to the Treasury, won over Tory rebels when he said the government was “determined” to help struggling households. The chancellor could make an announcement in next month’s autumn statement.
Javid said: “The government is doing all it can to help hard-working families with the cost of living and putting money back into their pockets. Action on fuel duty is part of this.
“Fuel duty is currently 20% lower in real terms compared to its peak in March 2000 and 7% lower compared to May 2010.
“If we had continued with the policies of the previous government, quite simply prices would be higher, fuel would be 10p more expensive per litre. I know some will call for a further freeze in fuel duty today. I can assure them this government understands the financial pressures hard-working families are facing. Subject to the constraints of the public finances, this government is determined to help families with the cost of living.”
Robert Halfon, a backbench Tory campaigner against rising fuel prices, threw his weight behind the government.
“I believe it is perfectly sensible and right to wait for the autumn statement, given the government’s record, given that they cut fuel duty last year and given that they have stopped two fuel duty rises,” Halfon told MPs.
In a reference to second world war codebreakers, Halfon added: “You don’t have to work at Bletchley Park to read the signals that the Treasury is sending out about giving help with the cost of living.”
Treasury sources indicated that Osborne would listen to Halfon’s demands by describing him as “brilliant”. Halfon made clear that he was wary of supporting a Labour motion dreamt up by Ed Balls.
But Cathy Jamieson, the shadow economic secretary, said the government should act as people struggle in the wake of the double-dip recession: “In the here and now petrol is 15p a litre higher than at the general election, it’s 5p a litre higher than in the summer, when the government last deferred a rise, and let’s remember that the chancellor took that decision following pressure from this side of the house.”
Labour to force Commons vote as shadow chancellor claims government should crack down on tax avoidance instead
Labour will force a Commons vote next week to call for a planned 3p hike in fuel duty to be postponed for a second time.
The shadow chancellor, Ed Balls, said “it cannot be right” to hit struggling families and businesses with another tax rise, and urged MPs from all sides to back demands for the government to cancel the increase due in January.
He claims the move could be funded by cracking down on tax avoidance schemes.
In a blog for PoliticsHome, Balls wrote: “At a time when the cost of living is rising, our recovery is fragile and this out-of-touch government is giving 8,000 millionaires a tax cut, it cannot be right to hit middle and low income families and small businesses with another tax increase.
“That is why Labour is calling on the chancellor to cancel January’s planned 3p rise in fuel duty – at least until next April. We will put this to a vote in parliament on Monday and I hope MPs from all parties will stand up for their constituents and back our call.
“Where should the government get the money to pay for this tax cut? I suggest they pay for this move by clamping down on tax avoidance. Customs has forecast that these schemes cost the exchequer £650m a year. Recent estimates have now put it as high as £1bn a year. But ministers have failed to take tough action to stop it happening.”
Chancellor George Osborne scrapped a planned 3p rise in fuel duty due in August at a cost of £550m.
Campaigners from FairFuelUK claim allowing the rise to go ahead in January could lead to 35,000 job losses and hit economic growth.
Labour is using one of its allotted opposition day debates in the Commons to force the vote, which is non-binding.
Senior Conservatives are already rehearsing the election lines they will use against Eds Miliband and Balls
A senior coalition figure puts it with stark profanity: “If the economy comes right, Labour is fucked. If it doesn’t come right, we’re fucked.” I wouldn’t frame it quite like that myself. It is too determinist to think that elections turn solely on whether the growth figure is positive or negative. Governing parties in Britain have won in the shadow of recessions and they have lost when presiding over expansion. But the basic point is surely right: the economy will be far and away the single most important issue when the country next makes a choice of governors. More specifically, many voters will be hugely influenced by whether their household disposable incomes are rising or falling.
Hence the rather desperate alacrity with which the prime minister and chancellor hailed the latest figures that suggested that the economy grew by 1% in the most recent quarter. Hence the welcome through gritted teeth that this news received from the Eds Balls and Miliband.
Both sides have to be very careful about how they address a country feeling the pain of prolonged austerity. Labour ought to be wary of exposing itself to the Tory charge that it is talking down recovery or secretly hoping for continued misery. The coalition, frantic for something to boost morale after a terrible few months, has to guard against the impulse to greet any modest movement in a positive direction as a glorious new dawn, a temptation to which David Cameron is prone to succumb.
In his early months as prime minister, back in October 2010, he seized on one quarter’s growth figures to brag that Britain was “out of the danger zone” and firmly set on the road to recovery. Within months, the economy was shrinking again. Once burnt, the prime minister is not twice shy. Naughtily pre-empting the official publication of the latest figures, he cockily told the Commons that the good news would keep coming, a rather reckless hostage to future fortune when there are considerable internal and external risks that Britain could slide into negative territory for a third time, a triple-dipper.
When trying to establish where the parties really stand with the public, the headline polling numbers are often not as informative as how voters answer the question: “Who do you most trust with the economy?” On the crucial issue of perceived economic competence, it is pretty much neck and neck between Labour and the Tories. There’s an encouraging way of looking at this from a Labour point of view. The two Eds have closed what used to be a yawning deficit on this question. Two and a half years since Labour was ejected from office, having presided over the worst financial crisis since the 1930s, the party has clawed its way back to rough parity with the Conservatives on economic competence. But there is also a way of looking at this which makes Labour frontbenchers nervous.
George Osborne has failed in the most important objective that he set himself. The central pillar of his original strategy – closing the budget deficit in a parliament – has no prospect of being achieved by the time of the next election. The original target date has already been put back by two years. Taxes have been hiked, spending squeezed and living standards crunched. Yet the governing party is still even-stevens with the opposition on economic competence and roughly 10 points behind in the headline poll numbers at midterm. Many governments have come back from much worse. Ken Clarke likes to remind younger Tory colleagues that he sat in Margaret Thatcher’s government when Conservative support fell to 18% and they went on to win the 1983 election by a landslide.
I don’t encounter many Tories who think that is likely to happen. But I do meet quite a lot of Conservatives who believe that, if growth can be sustained and the government manages to look competent for a change, Labour’s poll lead is very vulnerable. Senior figures in the Labour party think their Tory counterparts may be right and that current ratings are far more a reflection of the government’s failings than of a settled desire in the country to put Labour back into power.
There is a scenario that haunts some Labour frontbenchers. They sustain a poll lead all the way up to the threshold of the next election, only to lose it in the end because they had not dealt with the doubts about Labour nagging away at the electorate. The Conservatives are already practising their election themes. Boris Johnson played it for a laugh at the Tory conference in Birmingham, but it was a joke with deadly serious purpose, when he called David Cameron “a broom”, George Osborne “the dustpan” and compared other senior ministers to household implements “clearing up the mess left by the Labour government”.
In recent days, the prime minister and chancellor have been rehearsing other lines. It has been tough going, the Tories will say, and a bigger task than we expected because the inheritance from Labour was even worse than we imagined. But we are getting it done; re-elect us to finish the job. That will be a core Tory message. They might campaign on the slogan: “Britain’s On The Right Track. Don’t Turn Back.” They already own the copyright on that one having used it successfully against Labour in the past. One shadow minister suggests the Tories might also steal a soundbite from American politics: “Why hand the keys back to the guys who drove the car into the ditch?” Like cheap music, cheap slogans can be potent. In the words of one Labour frontbencher, the Tories could have the makings of “quite a compelling story”.
To counter it effectively, Labour will need a better story of its own, especially if growth is looking solid by the time of the next election. One line Labour is currently pushing hard is that the Tories have already done lasting, irrecoverable damage to the economy, which has disadvantaged Britain against major international competitors.
Ed Balls will pursue this theme with all the aggression for which he is famed, but the shadow chancellor also knows that it is very difficult to prove a counterfactual, a what might have been. Arguments about the past will probably matter less to voters at the next election than which of the parties seems to offer the best plan for the future. Labour will need a compelling case that it is better able to deliver jobs, rising incomes and enduring prosperity. There are unresolved tensions within the Labour high command about how to go about this. There is no open dissent from Ed Balls towards Ed Miliband’s speeches about reforming capitalism, but colleagues don’t come away from talking to the shadow chancellor with the impression that he burns with unbounded enthusiasm for this as a way of winning the confidence of voters. In the view of quite a lot of Labour MPs, ruminating about responsible capitalism is all very well, but also a bit too highfalutin. “What people will want to know at the next election is how we are going to make them better off,” says one member of the shadow cabinet.
Another, equally stiff challenge for Labour is to answer the anxieties about its trustworthiness when it comes to the nation’s finances. The Tories will ceaselessly repeat variations of David Cameron’s conference line: “Labour: the party of one notion – more borrowing.” The sort of questions in voters’ minds are well put by one senior Labour figure: “Will they always go for the short-term fix? Will they just throw money at problems and give in to vested interests?”
The two Eds have one main answer to this at the moment. That is to get themselves booed by trade union audiences at every opportunity by telling them that they won’t be able to reverse everything done by the coalition and warning that a Labour government will also have to inflict cuts.
That’s probably quite useful in improving their fiscal credentials with sceptical voters, but far from sufficient really to establish trust in Labour. There is a range of options on fiscal discipline. At the most astringent end of the spectrum, Labour could commit itself to introducing an American-style law setting a debt ceiling. This would oblige the government to ask for Parliament’s permission every time it wants to raise borrowing. I’m not persuaded they will go that far, but they will certainly need something very firm and convincing to win this part of the argument with their opponents.
Another crucial task for Labour is to impress the public that it would spend wisely and well. This demands some hard, imaginative and brave thinking about ways to sustain public services on reduced budgets. Labour’s team could also be doing a lot more to try to convince the public that they are resolved to extract the maximum return from every pound of taxpayers’ money. The party’s frontbenchers would be smart to seize every opportunity they get to talk about how they would reduce waste and eliminate inefficiencies.
The two Eds can be forgiven for not knowing what the economy will look like in 2015. No one does. But there is no excuse for not preparing for how the Tories will fight the election. Because they keep telling us.