Labour calls for £2bn tax on bonuses

LABOUR shadow chancellor Ed Balls yesterday claimed the government could create 110,000 jobs and build 25,000 new homes by clobbering the banks with a £2bn tax on bonuses.

Balls, who is seeking to flesh out Labour’s economic policy ahead of the Budget on 23 March, said the tax would “boost jobs and growth”.

He urged the government to spend £600m on a job creation scheme for unemployed youths – similar to the now-defunct future jobs funds – which he said would generate 90,000 jobs.

Labour’s future jobs fund was scrapped last year by the coalition after a Department for Work and Pensions study showed that 50 per cent of participants were back on benefits within seven months of joining the scheme.

Balls said the government should also put £1.2bn towards building 25,000 new homes, which he said would create a further 20,000 jobs – bringing the total to 110,000.

A further £200m should be used to boost the regional growth fund, he said.

Balls accused chancellor George Osborne of pursuing a “reckless experiment to cut too deep and too fast” and said the economy had “taken a turn for the worse”.

However, he remained tight-lipped on which spending reductions Labour would oppose and how it would fund the cost to the cash-strapped exchequer.

And he repeated his call for a reduction in fuel VAT, despite claims that such a tax cut would fall foul of European laws.