Miliband and Balls 'caught out' over 10p tax revival

Labour leader's tax announcement misfires after old interview reveals he supported 10p rate's abolition

Column LAST UPDATED AT 16:29 ON Thu 14 Feb 2013

LABOUR leader Ed Miliband and his shadow chancellor Ed Balls were caught out by the BBC today after promising to restore the 10p 'starting rate' of income tax by raising a 'mansion tax' on homes worth £2 million.

Miliband surprised the political world - but followed the advice given only this morning by the Mole - by making his first hard commitment on taxes in a speech on living standards.

His endorsement of the mansion tax will make it easier for Labour to form a political alliance with the Liberal Democrats if there is a hung Parliament after the next general election.

Ed Balls said Gordon Brown - his former boss - "made a mistake" by abolishing the 10p tax rate in 2007/08, hitting millions of low paid.

Balls estimated that the mansion tax would raise £1.7 to £2bn. It was put to Balls on Radio 4's World At One that that would mean an extra tax of £25,000 per year for householders with homes in the £2m-plus bracket. "In that kind of range," Balls answered.

Balls also said his old friend and mentor Gordon Brown had "lost touch" with ordinary Labour supporters when, in one of his last acts as Tony Blair's chancellor in 2007, he abolished the 10p tax rate leaving millions of low-paid worse off. As the Mole explained earlier today, Brown tried to compensate them by adjusting tax allowances but today they are still paying 20p in the £1.

But the World at One team caught out Balls and Miliband - and questioned Labour’s credibility on the economy - by playing a recording of Ed Miliband, then a member of Brown's team, defending the Labour chancellor over the 10p tax rate abolition in 2008. Back then, Miliband said: "When you make a big set of changes in the tax system, some people lose. That is a matter of regret. Overall these changes will make the tax system fairer."

He said it would cost £7bn - £8bn to restore the 10p rate as David Cameron was then asking. "I can't see how that would help our economic situation. I can't see how it would help people overall."

It raises the question – just how "in touch" with Labour voters was young Ed when he was clutching onto Gordon's shirt-tails back in 20097/08? ·