Gordon Brown yesterday said he remained committed to New Labour values of aspiration and opportunity, despite the government’s £7billion Budget tax hit on the wealthy.
The prime minister rejected claims that the new 50p top rate on people with incomes of more than £150,000 marked a return to old Labour politics of class warfare, insisting that it was not “taxation for its own sake”.
Meanwhile the Tories claimed the country was facing a “secret tax bombshell” after the Institute for Fiscal Studies (IFS) calculated the economic crisis was costing the Treasury £90billion a year – the equivalent of £2,848 for every family.
While half the cost had been covered by Budget tax rises and spending cuts in the next parliament, the remaining £1,430 a year per family would have to be raised in the parliament after that.
Shadow chancellor George Osborne said: “This secret tax bombshell of £1,430 was not even announced by the chancellor. It shows what a dishonest Budget it was and how quickly it is unravelling.”
Downing Street queried the way the IFS figures had been calculated.
“It does seem to include efficiency savings that are being made, which is why we are able to have a lower projected growth in public sector current expenditure,” the prime minister’s spokesman said. “Therefore, it is not entirely clear why we would count an efficiency saving as a cost to a family.”
Earlier, at a Prince’s Trust event in London, Mr Brown insisted it had been necessary to raise taxes to get the public sector back on track and that it had been right that the better-off should contribute more.
“The point we have to accept is, if we are going to give people opportunities they need for the future, then there has got to be a contribution by those who have the most and who have gained the most over the last few years,” he said.
“This is not taxation for its own sake. It is tax for a purpose. This is Britain fighting back against the international recession.”
Although the introduction of the 50p rate breached a key manifesto commitment which helped to define New Labour in the 1990s, he insisted that he remained wedded to the vision which he developed with former prime minister Tony Blair.
“What we are about is aspiration. We are about giving people new chances. We are about helping people make the most of their potential. New Labour, that’s what we’re about,” he said.
Despite the denials that the 50p rate had been introduced for political reasons, Labour strategists will have been delighted to see it almost immediately led to divisions within the Tory ranks.
London Mayor Boris Johnson led calls for the Conservatives to pledge to reverse the measure if they won the next general election.
However, Mr Osborne, said his priority was to overturn the planned 0.5% increase in national insurance contributions which would affect everyone on £20,000 or more.