Ed Miliband: Labour would have kept the 50p tax and is ready to break up banks

Tim Wallace
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IF LABOUR won an election tomorrow, it would keep the 50p rate of tax, introduce a new tax on bankers and spend the proceeds of the upcoming 4G spectrum auction on building 100,000 affordable homes, Ed Miliband said yesterday.

But he would not commit to doing so if he wins the 2015 election, on the basis that public finances may be radically different in two-and-a-half years’ time.

The leader of the opposition also threatened to break up Britain’s biggest banks if they have not entirely changed their culture to properly reflect the interests of their customers by 2015.

He also said Len McCluskey the Unite trade union head was wrong to oppose a public sector pay freeze.

“The first change in a Labour budget: we would not be cutting the top rate of income tax from 50p to 45p,” he said. “Next April David Cameron will be writing a cheque to each and every millionaire in Britain for £40,000,” he claimed.

But business group the CBI said higher taxes would damage the economy.

“The UK must be open for business and a 50p rate would put entrepreneurs off from coming and investing in jobs here,” said its boss John Cridland. “The chancellor settled this matter when he reduced the rate to 45p from next year.”

And the British Bankers’ Association (BBA) rejected calls for an even tougher separation of retail and investment banking.

“Many countries and international authorities have looked at breaking up the banks, but all have rejected it because it would be bad for customers, bad for financial stability, and bad for the economy,” said a BBA spokesperson.

“If the UK departed from the solid international consensus, and became the first country to break up its banks, we would also be surrendering our ability to take part in the recovery.”

Under current government plans, retail and investment banking operations will be separated by a ringfence, but the banks will remain in one piece overall.

The ideas came just a day after Miliband told the pensions industry he would cap their fees if they do not start serving savers more effectively and proposed a new legal duty for financial services professionals to maximise savers’ returns.

Shadow business secretary Chuka Umunna will today announce a review of policy to decide how a Labour government would work best with businesses. He is appointing Lord Adonis to create “a modern industrial strategy”.

Umunna will call for a strategy to build “an economy offering the opportunities and training not just for young people who want to work in banking, media or law, but also prestigious vocational routes for those eager to become engineers, digital programmers, or advanced manufacturers.”