Left Watch

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Treasury Minister claims there would be "no new tax rises" if Labour were re-elected

Picture 3 The Telegraph today splashes on news that Liam Byrne, the Chief Secretary to the Treasury, has ruled out further tax increases, including VAT, in the event of a Labour Government being re-elected (although it has already announced the 50% tax rate on income over £150.000 and the 0.5% rise in National Insurance).

It reports:

In his pre-Budget report in December, Alistair Darling, the Chancellor, said that the Government would halve the £178 billion deficit in four years. This would be achieved by cutting Whitehall spending and bringing in £19 billion from previously announced tax rises.

Mr Byrne, who is number two at the Treasury, was asked on BBC Two's Daily Politics show whether the deficit could be halved without more tax rises. He claimed no more were needed. "We've set out exactly how we will find that £19 billion, and we set that out in the pre-Budget report," he said.

There has been speculation that the Budget on March 24 could include an increase in VAT from 17.5 per cent to 20 per cent, but Mr Byrne said: "We don't see a need to do that because we've made some difficult decisions about National Insurance contributions."

Do we believe him? It all sounds so familiar. Do you remember what Tony Blair said not long before the 1997 general election:

"We have no plans to increase tax at all."

Carl Emmerson of the independent Institute for Fiscal Studies sounds unconvinced that Labour's figures add up now:

"I cannot see how the Government can promise to not affect front line services when you look at the scale of the cuts they have got to plan for. Liam Byrne is talking just about the first four years and after that there will undoubtedly have to be more pain and that is likely to be tax rises or even greater public sector cuts."

Shadow Chancellor George Osborne adds:

"It sounds to me like the chief secretary is not really in command of his figures. We haven't heard from Alistair Darling who's actually the person who's setting out the budget. And that's the problem with this government - lots of hints, leaks, gaffes, but not a clear plan to deal with Britain's debt."

Jonathan Isaby