By . Simon Walters . PUBLISHED: . 20:23 EST, 25 January 2014 . | . UPDATED: . 20:49 EST, 25 January 2014 . Backlash: Ed Balls addresses the Fabian Society yesterday . Labour was facing a damaging split last night after allies of  Tony Blair accused Ed Miliband of taking the party back to the 1970s when it vowed to ‘tax the rich until the pips squeak’. The backlash came after Shadow Chancellor Ed Balls said that a future Labour Government would raise the top rate of income tax from 45p in the pound to 50p for those earning over £150,000, reversing a cut made by David Cameron. Mr Balls claimed the increase was vital to reduce the budget deficit ‘more fairly’. Labour MPs and union leaders hailed the initiative as a ‘populist vote-winner’ that could propel the party into power at next year’s General Election. But the tax hike was attacked by powerful figures close to Mr Blair, who claimed it was a ‘lurch to the Left’ reminiscent of Harold Wilson’s Government, when the top rate of tax rose to 83p – and 98p when unearned income was added. One of Mr Blair’s key supporters said: ‘This takes Labour back to the 1970s. It’s goodbye to the enterprise economy with knobs on. 'It is a return to the outmoded idea that you are for or against the poor. The whole point of New Labour was it showed you could help the poor and wealth creators at the same time. ‘Miliband and Balls are turning their backs on that. Miliband thinks he is redesigning capitalism with the same fervour that Margaret Thatcher did, and talks grandly of helping the low-paid by the “predistribution” of wealth instead of redistribution. ‘The trouble is they are economically illiterate and have no understanding of business or profits.’ Former Labour City Minister Lord Myners said: ‘We need to encourage productive enterprise and effort rather than resort to predatory taxation. It’s not clear how this is going to help the UK economy compete with the world’s growth economies. 'The UK already has an income tax system that is more progressive than most of our international competitors.’ His comments were echoed by business leaders, including Simon Walker, director-general of the Institute of Directors, who urged Labour to ‘drop its practice of knee-jerk reversion to the old Socialist nostrums that so damaged Britain’s economy in the past’. Why is Ed Balls announcing this plan now? Labour argues that, with 15 months to go until the 2015 Election, it is time to set out its core economic policies. The Conservatives say that  Mr Balls has been thrown into crisis by the success of George Osborne’s deficit-cutting, and needs to rescue his career with  an eye-catching policy.What proportion of total tax revenue comes from the highest earners? The top one per cent – those earning more than £160,000 – accounted for 30 per cent of all income tax last year.Are top earners contributing more than  they used to? The proportion of income tax paid by the top one per cent has risen from a fifth to a third in a decade.Will the 50p rate raise extra money? Balls claims that between 2010 and 2013, when the 50p top-rate applied, the tax take from £150,000-plus earners rose by more than £3 billion a year. Osborne says the additional revenue from 50p was just £500 million a year – with the rest coming from crackdowns on tax-dodging and a surge in the economy. The Office  for Budget Responsibility says the lost tax revenue from cutting the rate from 50p to 45p last year was just  £100 million. How does the UK compare with other countries? France has the top rate – those earning more than €1million pay 75 per cent. The UK’s 45p rate is the 11th highest in Europe – but it’s still above the US top rate of 39.6 per cent and the EU average of 37.9 per cent. How many people will pay the top rate? In 2011, 236,000 paid tax at the 50p rate, out of  31 million taxpayers in the UK. And Sir Stuart Rose, the former Marks & Spencer chairman and current head of Ocado, added: ‘This is a very bad idea – it will put in jeopardy all the good work that has been done to put the economy back on track. ‘It will send out worrying messages to the wrong people, and will risk confidence and investment. My biggest single worry is why, when we have come all this way, would you want to risk that with a move like this? ‘Interest rates remain low and the Government says they will continue to do so; confidence is returning, people are coming back to work. The signs are the economy is improving. ‘This move is tokenistic. It’s a small amount of money coming from an income bracket that contributes heavily to income tax with a potentially damaging effect on confidence.’ Mr Balls’s speech yesterday came after accusations that he miscalculated by claiming the Tories’ ‘austerity Britain’ package of savage spending cuts would make the recession worse. Instead, there is growing evidence that the economy is on the mend. Mr Balls said the last Labour Government’s decision to lift the top rate to 50p resulted in those earning over £150,000 paying an extra £10 billion in tax over three years. But the Tories pointed out that the Treasury disputes this, claiming it raises less than £1 billion a year and has a damaging effect on job creation. Mr Balls said Labour also wanted a lower 10p starting rate of tax for those on middle and lower incomes. ‘When the deficit is still high and for ordinary families, real incomes are falling and taxes have risen, it cannot be right for Cameron and [George] Osborne to give the richest people in the country a huge tax cut,’ he said. ‘That’s why the next Labour Government will reverse the top-rate tax cut. ‘We will create a fairer tax system, crack down on tax avoidance and reverse the cut for hedge funds. Those with the broadest shoulders should bear a fairer share of the burden.’ Labour has already indicated it plans to impose a ‘mansion tax’ on homes worth over £2 million. His speech to the Labour-supporting Fabian Society follows a series of rows with Mr Miliband and other colleagues. Last November, The Mail on Sunday revealed how an email from Mr Miliband’s office described Mr Balls as a ‘nightmare’. And earlier this month we disclosed how Mr Balls had to be ‘dragged apart’ from Shadow Foreign Secretary Douglas Alexander. Furthermore, Tory MPs have taunted Mr Balls for abandoning his ‘flatlining’ gesture – in which he waved the palm of his hand horizontally at Mr Cameron and Mr Osborne in Commons clashes – representing the ‘flatlining’ economy. The recent rise in growth figures has forced him to keep his hands by his side. On the face of it, Ed Balls’s plan to raise the top-rate of tax to 50p is a vote-winner. It is supported by  six out of ten adults overall, with fewer than one in five against. Even Tory supporters favour it by  a small margin. But the problem for Mr Balls and Labour leader Ed Miliband is that voters do not trust them – or their motives. That is the deeper picture that emerges from a Survation poll  for The Mail on Sunday carried out immediately after Mr Balls’s dramatic announcement yesterday. Nearly half of voters say the 50p plan stems from Labour’s desire to target the rich for its own sake, with just 32 per cent siding with Mr Balls’s claim that it is a vital source of extra revenue for the public purse. And if Mr Balls thought his pledge  to balance the books by 2020 would convince people the economy is safe in his hands, he has more reassuring to do – 57 per cent say he will not achieve it, with 22 per cent won over. Voters are evenly divided on claims made by some business leaders that the tax hike for the well-off will force entrepreneurs to flee Britain, as a wealth tax has done in France. A total of 38 per cent say this will happen against 40 per cent who say it won’t. Regardless of its populist appeal,  Mr Balls’s 50p tax plan has not seen his ratings overtake those of George Osborne. A total of 28 per cent trust Mr Balls to run the economy, with  Mr Osborne on 34. Survation pollster Damian Lyons-Lowe said: ‘The 50p income tax proposal is clearly popular in itself – even a fair number of Conservative voters approve of it. But the problem for Mr Balls is he lacks credibility.’
Blair allies accuse the Shadow Chancellor of 'economic illiteracy'
They say 'Socialist' move takes the party back to days of Harold Wilson .
Survation interviewed 1,064 people online yesterday afternoon .
By . Simon Walters . PUBLISHED: . 20:23 EST, 25 January 2014 . | . UPDATED: . 20:49 EST, 25 January 2014 . Backlash: Ed Balls addresses the Fabian Society yesterday . Labour was facing a damaging split last night after allies of  Tony Blair accused Ed Miliband of taking the party back to the 1970s when it vowed to ‘tax the rich until the pips squeak’. The backlash came after Shadow Chancellor Ed Balls said that a future Labour Government would raise the top rate of income tax from 45p in the pound to 50p for those earning over £150,000, reversing a cut made by David Cameron. Mr Balls claimed the increase was vital to reduce the budget deficit ‘more fairly’. Labour MPs and union leaders hailed the initiative as a ‘populist vote-winner’ that could propel the party into power at next year’s General Election. But the tax hike was attacked by powerful figures close to Mr Blair, who claimed it was a ‘lurch to the Left’ reminiscent of Harold Wilson’s Government, when the top rate of tax rose to 83p – and 98p when unearned income was added. One of Mr Blair’s key supporters said: ‘This takes Labour back to the 1970s. It’s goodbye to the enterprise economy with knobs on. 'It is a return to the outmoded idea that you are for or against the poor. The whole point of New Labour was it showed you could help the poor and wealth creators at the same time. ‘Miliband and Balls are turning their backs on that. Miliband thinks he is redesigning capitalism with the same fervour that Margaret Thatcher did, and talks grandly of helping the low-paid by the “predistribution” of wealth instead of redistribution. ‘The trouble is they are economically illiterate and have no understanding of business or profits.’ Former Labour City Minister Lord Myners said: ‘We need to encourage productive enterprise and effort rather than resort to predatory taxation. It’s not clear how this is going to help the UK economy compete with the world’s growth economies. 'The UK already has an income tax system that is more progressive than most of our international competitors.’ His comments were echoed by business leaders, including Simon Walker, director-general of the Institute of Directors, who urged Labour to ‘drop its practice of knee-jerk reversion to the old Socialist nostrums that so damaged Britain’s economy in the past’. Why is Ed Balls announcing this plan now? Labour argues that, with 15 months to go until the 2015 Election, it is time to set out its core economic policies. The Conservatives say that  Mr Balls has been thrown into crisis by the success of George Osborne’s deficit-cutting, and needs to rescue his career with  an eye-catching policy.What proportion of total tax revenue comes from the highest earners? The top one per cent – those earning more than £160,000 – accounted for 30 per cent of all income tax last year.Are top earners contributing more than  they used to? The proportion of income tax paid by the top one per cent has risen from a fifth to a third in a decade.Will the 50p rate raise extra money? Balls claims that between 2010 and 2013, when the 50p top-rate applied, the tax take from £150,000-plus earners rose by more than £3 billion a year. Osborne says the additional revenue from 50p was just £500 million a year – with the rest coming from crackdowns on tax-dodging and a surge in the economy. The Office  for Budget Responsibility says the lost tax revenue from cutting the rate from 50p to 45p last year was just  £100 million. How does the UK compare with other countries? France has the top rate – those earning more than €1million pay 75 per cent. The UK’s 45p rate is the 11th highest in Europe – but it’s still above the US top rate of 39.6 per cent and the EU average of 37.9 per cent. How many people will pay the top rate? In 2011, 236,000 paid tax at the 50p rate, out of 31 million taxpayers in the UK. And Sir Stuart Rose, the former Marks & Spencer chairman and current head of Ocado, added: ‘This is a very bad idea – it will put in jeopardy all the good work that has been done to put the economy back on track. ‘It will send out worrying messages to the wrong people, and will risk confidence and investment. My biggest single worry is why, when we have come all this way, would you want to risk that with a move like this? ‘Interest rates remain low and the Government says they will continue to do so; confidence is returning, people are coming back to work. The signs are the economy is improving. ‘This move is tokenistic. It’s a small amount of money coming from an income bracket that contributes heavily to income tax with a potentially damaging effect on confidence.’ Mr Balls’s speech yesterday came after accusations that he miscalculated by claiming the Tories’ ‘austerity Britain’ package of savage spending cuts would make the recession worse. Instead, there is growing evidence that the economy is on the mend. Mr Balls said the last Labour Government’s decision to lift the top rate to 50p resulted in those earning over £150,000 paying an extra £10 billion in tax over three years. But the Tories pointed out that the Treasury disputes this, claiming it raises less than £1 billion a year and has a damaging effect on job creation. Mr Balls said Labour also wanted a lower 10p starting rate of tax for those on middle and lower incomes. ‘When the deficit is still high and for ordinary families, real incomes are falling and taxes have risen, it cannot be right for Cameron and [George] Osborne to give the richest people in the country a huge tax cut,’ he said. ‘That’s why the next Labour Government will reverse the top-rate tax cut. ‘We will create a fairer tax system, crack down on tax avoidance and reverse the cut for hedge funds. Those with the broadest shoulders should bear a fairer share of the burden.’ Labour has already indicated it plans to impose a ‘mansion tax’ on homes worth over £2 million. His speech to the Labour-supporting Fabian Society follows a series of rows with Mr Miliband and other colleagues. Last November, The Mail on Sunday revealed how an email from Mr Miliband’s office described Mr Balls as a ‘nightmare’. And earlier this month we disclosed how Mr Balls had to be ‘dragged apart’ from Shadow Foreign Secretary Douglas Alexander. Furthermore, Tory MPs have taunted Mr Balls for abandoning his ‘flatlining’ gesture – in which he waved the palm of his hand horizontally at Mr Cameron and Mr Osborne in Commons clashes – representing the ‘flatlining’ economy. The recent rise in growth figures has forced him to keep his hands by his side. On the face of it, Ed Balls’s plan to raise the top-rate of tax to 50p is a vote-winner. It is supported by  six out of ten adults overall, with fewer than one in five against. Even Tory supporters favour it by  a small margin. But the problem for Mr Balls and Labour leader Ed Miliband is that voters do not trust them – or their motives. That is the deeper picture that emerges from a Survation poll  for The Mail on Sunday carried out immediately after Mr Balls’s dramatic announcement yesterday. Nearly half of voters say the 50p plan stems from Labour’s desire to target the rich for its own sake, with just 32 per cent siding with Mr Balls’s claim that it is a vital source of extra revenue for the public purse. And if Mr Balls thought his pledge  to balance the books by 2020 would convince people the economy is safe in his hands, he has more reassuring to do – 57 per cent say he will not achieve it, with 22 per cent won over. Voters are evenly divided on claims made by some business leaders that the tax hike for the well-off will force entrepreneurs to flee Britain, as a wealth tax has done in France. A total of 38 per cent say this will happen against 40 per cent who say it won’t. Regardless of its populist appeal,  Mr Balls’s 50p tax plan has not seen his ratings overtake those of George Osborne. A total of 28 per cent trust Mr Balls to run the economy, with Mr Osborne on 34. Survation pollster Damian Lyons-Lowe said: ‘The 50p income tax proposal is clearly popular in itself – even a fair number of Conservative voters approve of it. But the problem for Mr Balls is he lacks credibility.’
Blair accused Ed Miliband of taking the party Shadow Chancellor Ed Balls said that a future of Harold Wilson’s Government, when the top rate ‘This takes Labour back to the 1970s. It’s announcement yesterday. Nearly half of voters say