Balls: Labour Government would restore 50p tax rate

Shadow chancellor Ed Balls has said that Labour would restore the 50p tax rate for people earning over £150,000 if the party wins the next election.

Mr Balls told the Fabian Society annual conference today that he would introduce a legally binding pledge to balance the books, run a current budget surplus and cut the national debt.

The move echoes Chancellor George Osborne's plans to wipe out the deficit by 2018/19 but Labour insists the timescale for its commitment is dependent on the state of the economy after the election.

Mr Balls said restoring the 50p tax - reduced to 45p under the Coalition last year - would go towards meeting the target.

ITV News Political Correspondent Libby Wiener reports:

The Conservatives claim Labour has "no economic plan" following the shadow chancellor's speech on the economy.

The Institute of Directors (IoD) said Labour must "drop its practice of knee-jerk reversion to the old socialist nostrums" if the party wants to be taken seriously by business.

Director general Simon Walker said: "The 50p tax rate - actually 52p, because the last Labour government manipulated national insurance contributions - greatly damaged Britain's claim to being seen as a low-tax economy and actually drove down total tax receipts.

"It was, and remains, an envy-driven political gesture designed solely to drive a wedge between voters."

He added, "It will significantly damage Labour's credibility with the business community."

Lib Dem Chief Secretary to the Treasury Danny Alexander said "Labour's hypocrisy on taxation is breathtaking" after Ed Balls set out the party's economic policy ahead of the 2015 General Election.

Mr Alexander said the shadow chancellor's speech shows the party "have learned nothing from the last few years and would undermine the foundations of Britain's economic recovery" and reintroducing the 50 pence tax rate "wouldn't help".

He said: "In Government they left a system full of loopholes for the wealthy to exploit.

"Thanks to our action in Government to raise capital gains tax, reduce pensions tax relief for the wealthiest, and tackle avoidance, Lib Dems in Government are raising more from those who have the most and making Britain more competitive."