Tensions emerged in the shadow cabinet this morning as senior Labour MPs expressed annoyance that they were not informed last week before Ed Balls announced party support for a temporary reversal in January’s rise in VAT.
Mr Balls held back his unveiling of the policy until the morning of his speech on the economy at the London School of Economics on Thursday, surprising many of his senior colleagues.
Tessa Jowell, shadow Olympics minister, pointedly asked during a four-hour meeting of the shadow cabinet why its members had not been consulted about the announcement.
One Labour frontbencher described the lack of discussion as “weird”, given that Mr Balls had made a lengthy speech to the parliamentary Labour party the previous Monday.
Another said: “It’s ridiculous when all our policies have to go past both Eds but then we have to go out on the airwaves and defend this VAT policy without any warning.”
One shadow cabinet member said: “We knew nothing about [the VAT cut pledge] until we heard it on the news. The problem is that it is playing to our weaknesses and creates the impression that we can’t face up to tough decisions.”
A Labour official refused to comment on shadow cabinet talks but party sources said Mr Balls and Ed Miliband, the party leader, were united on the need to reverse the VAT rise, which will raise £13bn a year , “as soon as possible”. A party insider said: “There’s not a wafer of difference between them on this.”
The speech was cleared with “key people”, including Mr Miliband, who was “aware of it”, said officials. (Contrary to one rumour doing the rounds). But the level of media interest took them all by surprise; they may have thought the policy of reversing the VAT rise was incremental given that Labour vehemently opposed the increase in January.
The policy has raised concerns among some senior Labour figures because, they believe, it adds to the impression that the party is loath to take difficult decisions. Not only is Labour promising fresh tax cuts, such as the VAT move, but it has also been reluctant to spell out precisely where it would find tens of billions of pounds of cuts to public spending.
Mr Balls is set to debate the issue with George Osborne, the chancellor, in the Commons on Wednesday – the anniversary of the emergency budget.
Labour MPs are worried that public faith in their leadership’s economic policies appears to be waning.
A Populus opinion poll last week showed only 23 per cent of those surveyed said they trusted Mr Miliband and Mr Balls “to manage the economy in the best interests of Britain” – down 10 points from March. That compared with 41 per cent backing the coalition’s economic policies.
Mr Balls last week advocated a temporary VAT cut, reversing January’s rise from 17.5 per cent to 20 per cent, to give the economy a “jump-start”. That prompted scorn from Mr Osborne, who said today in the chamber that the policy was “another nail in the coffin of the shadow chancellor’s credibility.”
Jim Pickard
Kiran Stacey