Page last updated at 20:45 GMT, Monday, 27 April 2009 21:45 UK

Byers attacks 'cynical' tax move

Stephen Byers
Mr Byers said the move was more about positioning than principle

Former cabinet minister Stephen Byers has criticised the new 50p rate of income tax and called for "clarity" over Labour's future direction.

He told fellow MPs the change had been introduced for "cynical political reasons" and would do long-term damage to the country and the party.

There were "mixed messages" over how long the 50p rate for those earning over £150,000 would stay, he said.

The Tories have said the move signals the "death knell" of New Labour.

A 50p rate for earnings over £150,000, being brought in from next April, was a key part of Wednesday's Budget.

The Tories say Labour has broken a key manifesto pledge from 1997, 2001 and 2005 not to increase income tax, meaning the end of the New Labour project started under Tony Blair's leadership.

'Tactical manoeuvring'

During a Commons debate, Mr Byers - a leading Blairite - conceded it had been the "most difficult" Budget for a Labour chancellor to bring forward since 1997 and that Alistair Darling had done an "excellent job" under the circumstances.

But the 50p rate failed to recognise that the UK needed entrepreneurs to create wealth and would make the UK less attractive internationally, he went on.

If a handful of ageing pop stars and money-grubbing bankers leave the country as a result, I say good riddance
Kelvin Hopkins, Labour MP

It would only be paid by 350,000 people, which was not enough of a "broad base" to raise significant sums of money, Mr Byers added.

The Institute for Fiscal Studies had raised doubts that it would raise any revenue at all, he said.

Before last week's Budget, the government had promised to introduce a 45p rate from 2011.

Mr Byers told MPs: "The only sensible conclusion to draw is that when one looks at the fact it's being brought forward to April 2010 - probably just a few weeks away from a general election - and that it's targeting a very small number of taxpayers - that this proposal, the 50p rate proposal, has more to do with political positioning and tactical manoeuvring than a principled and strategic approach to taxation and the raising of revenue."


Some had suggested the rate was an "elephant trap" for the Tories, Mr Byers, a former transport secretary, said.

"It's a trap which is so large and well signposted that even the most myopic old tusker would have little difficulty in avoiding it."

Some Tories would be upset that it was not being opposed by their party, the former transport secretary said.

"I believe it should be opposed because in the long run it will be something which will be damaging for both the Labour Party and the economy," he added.

Mr Byers, MP for North Tyneside, said: "I think we will regret for many years to come as a Labour Party that a manifesto pledge on tax is to be broken in this particular way and broken literally a few weeks before a general election."

It could be delayed to July next year - after an election - to honour the pledge, he argued, adding: "But we aren't doing that. We are doing that, I believe, for cynical political reasons which simply won't work in our interests."

He said: "I think the chancellor is clear that for him it is a short-term measure which for him will not be a permanent fixture of a tax regime.

"There are other members of the cabinet who are saying other things. And I think we need clarity as members of the Labour Party as to the direction in which we are going, we need clarity from senior cabinet ministers."

But Labour MP Kelvin Hopkins welcomed the proposed 50p tax rate and condemned the "pathetic and contemptible" criticism of it by the "mega rich".

He said: "If a handful of ageing pop stars and money-grubbing bankers leave the country as a result, I say good riddance.

"My concerns are about the jobless and the poor who will really suffer from this recession."

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