Miliband wants tax raid on bankers renewed

THE Government has been challenged to create 110,000 jobs through a £2bn raid on bankers’ bonuses again this year as Labour steps up its economic attack ahead of next week’s Budget.

Labour leader Ed Miliband and Shadow Chancellor Ed Balls said the bonus tax – imposed as a one-off last year when they were in power – should be renewed to create a windfall to help to stimulate the economy.

They claim the levy would bring in at least £2bn, which could be spent building 25,000 affordable homes generating 20,000 construction jobs, establishing a £600m fund to help 90,000 young people into jobs or apprenticeships and putting an extra £200m into the Regional Growth Fund, which aims to create private sector jobs outside the South-East.

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Labour MPs claimed the move was necessary to help to rescue the economy, which shrank in the final quarter of last year, but the Conservatives hit back by accusing the Opposition of making £12bn of unfunded spending commitments while opposing Government spending cuts.

With the Government also being urged to ease the pain of soaring fuel prices for motorists in next Wednesday’s Budget, Labour is also set to step up pressure tomorrow by forcing a Commons vote.

They will urge Conservative and Liberal Democrat MPs to back a motion calling for January’s 2.5 per cent VAT increase to be reversed on road fuels.

Ministers have hinted that they will at least postpone the next increase due to be introduced in April.

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But Beverley and Holderness Tory MP Graham Stuart has renewed calls for a fair fuel stabiliser – which is under examination by the Treasury – that would cut duty when oil prices are high and increase the tax take when prices fall.

“I hope this Government, unlike the previous one, realises assaulting the motorist with unfair fuel duty increases is not the way to keep the wheels of the economy turning,” said Mr Stuart.

Yesterday’s Press conference was the first joint outing by the two men since Mr Balls, MP for Morley and Outwood in West Yorkshire, was named Shadow Chancellor when Alan Johnson, MP for West Hull and Hessle, suddenly quit the front bench.

Mr Miliband, MP for Doncaster North, said he had given up hope that the coalition Government would reverse its drive to remove the deficit by 2015 saying it was now “too dug in”, but appealed to Ministers to reintroduce the bonus levy, which brought in £3.5bn last year.

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“As a matter of simple fairness, at a time when everyone else is facing tax rises, it is completely wrong for this Tory-led government to choose to cut taxes for the banks,” he said.

“The banks, who helped create the financial crisis, must now help return our economy to growth.”

The bonus tax was supposed to be a one-off because a global deal on banking reform was expected to be agreed but Mr Miliband said that had not happened so it was legitimate to reintroduce it, on top of the banking levy already imposed by the Government.

Mr Balls added: “We need a plan that puts jobs and growth first because getting more people into work and the economy growing strongly again is the best way to get the deficit down.”

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The two men insisted that they were still committed to Labour’s election plan of halving the deficit, but Mr Balls rejected claims that the pledge meant they would be imposing cuts almost as deep as the Government’s proposals.

He pointed to borrowing coming in £20bn less than predicted when Alistair Darling was the Chancellor, but refused to be drawn on whether he would have used that money for extra spending.

However, Treasury Minister Justine Greening claimed Labour’s bonus tax would raise less overall than the Government’s permanent bank levy.

The Tories released research which they claimed showed that over the past month, Labour had made £12bn of unfunded spending commitments and opposed more than £50bn of spending cuts.

“They seem to be in continued denial about the fact that the deficit even exists. There is a ginormous gaping hole in the Labour Party’s fiscal plans and in their credibility,” Ms Greening said.