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The Weekly Telegraph

Thu Apr 30 - Wed May 6 2009

www.telegraph.co.uk/expat

Caine mutiny Tax rise ‘will force me across the Pond ’

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NEWS

By Andrew Pierce

ONE of Tony Blair’s key allies publicly condemned the new 50p rate of income tax for high earners this week.

In a calculated intervention in the House of Commons, Stephen Byers, the former transport secretary, said: “I think we will regret it for many years to come in the Labour Party. I don’t think the case for the 50p rate has been made.”

He said the Government had fallen into an “elephant trap” in last week’s Budget so large that even a short-sighted “old tusker” should have been able to see it.

The attack came only 48

hours after The Daily Telegraph disclosed that Mr Blair privately believed the 50p rate for people earning £150,000 or more was a “terrible mistake”.

It will increase fears among Gordon Brown’s supporters of a deliberate attempt by supporters of the former Prime Minister to undermine his premiership.

In a rallying cry to Labour rebels made during the parliamentary debate on the Budget, Mr Byers said the tax rise should be opposed because it was damaging to the party and broke a key manifesto pledge.

Other New Labour architects have also criticised the move, which they believe will cost the party any hope of winning the general election.

The disclosure that Mr Blair indicated his opposition is likely to have caused consternation in Downing Street.

Last Friday’s Daily Telegraph /YouGov poll gives the Conservatives an 18-point lead, up from a 10-point lead in March. If the result were repeated at a general election, Mr Cameron would be returned to Downing Street with a majority of more than 150.

One friend of Mr Blair said: “Tony thought the original proposal to raise the top rate to 45 pence was just about saleable in the current economic circumstances. But he

IM AG ES

G ET TY

Sir Michael Caine will leave Britain for America if the Government raises taxes again. In an interview with The Sunday Telegraph, the actor, pictured with wife Shakira,

believes taking 50 per cent is not acceptable. He thinks it’s a terrible mistake.”

One of Mr Blair’s closest allies said last week: “The 50p tax move is a disaster. Blair would have cut taxes, not increased them.”

The hostile public reaction to the Budget has intensified speculation that the Prime Minister could face a leadership challenge.

Meanwhile, The Sunday Telegraph revealed that the 50p top rate was imposed despite

By Robert Winnett

DAVID CAMERON said this week that he was not “frightened” to announce public-sector spending cuts as he pledged to crack down on pay and pensions.

Speaking at the Conservative spring conference in Cheltenham, Mr Cameron said he would establish a “Government of thrift” if elected.

He is braced for a showdown with trade unions after saying that public sector pay had to “reflect the realities of the economic situation”.

In the speech he named several employees he believed earned too much. Ed Richards, the chief executive of Ofcom, earns £400,000 and British Waterways Board bosses Robin Evans, Nigel Johnson, James Froomberg and Phillip Ridal, have combined salaries of £900,000 — enough to employ

30 nurses. He said a Tory government would publish details of all employees who earn more than £150,000. This would “out” the “quangocrats” and mandarins who have been “getting rich at the taxpayer’s expense”.

The Conservative leader said means-tested tax credits for people earning more than £50,000 would be scrapped.

About 100,000 households would lose tax credits under the Tory plan.

The Conservative leader also indicated that his party may freeze public spending.

“We said they [Labour] should reduce their spending plans back in 2008,” he said. “And now we’re saying they should abandon their irresponsible plan to spend more in 2010. Controlling public spending and delivering more for less must start now. We’ve made it clear that a Conserva

tive government would spend less than Labour.”

Mr Cameron said he wanted to replace “Labour’s spendaholic government with a new government of thrift”.

“With a Conservative government, if ministers want to impress the boss, they’ll have to make their budgets smaller, not bigger,” he said. “On my watch it will be simple: if you do more for less you get promoted. If you do less for more, you get sacked.”

Mr Cameron also warned that he was likely to have to increase taxes to pay off soaring levels of government debt.

“Fifteen years ago, I was in the Treasury as we had to deal with public finances that had got out of control,” he said. “We had to put up taxes, and I hate it. But it was the right thing to do and that lesson has stayed with me. That’s why I’m a fiscal conservative.”

told of his anger at the rise in the top rate of income tax to 50 per cent. Sir Michael, who is worth around £45million, said: “We’ve got three-and-ahalf million layabouts laying

an official Treasury prediction that more than two thirds of people earning more than £150,000 would not pay it.

A pre-Budget “modelling” exercise conducted by the Treasury forecast that 69 per cent of people affected by the new levy — which comes into force next year — would find ways of avoiding it.

A Treasury source admitted it was clear that a large majority of wealthy individuals would make use of a wide range of schemes which would

about on benefits, and I’m 76, getting up at 6am to go to work to keep them. Let’s get everybody back to work so we can save a couple of billion and cut tax.”

prevent them falling into the 50p tax band. It is designed to bring in £2.4billion a year by 2012/13.

He said: “Our estimates suggest that 69 per cent of those affected by the new 50p rate will avoid or evade paying at least some of the tax.”

The Treasury said it would not comment on the modelling it used.

Budget details: Pages 6-8 Comment: Pages 20-23 Impact on expats: Page 35

By Tom Whitehead

JACQUI SMITH, the Home Secretary, this week scrapped plans for a national communications database amid privacy fears. Miss Smith stepped back from the Big Brother state by admitting the proposed “super database” to store all communications was “extreme” and too intrusive.

However, she is pushing ahead with proposed new powers to track every phone call, email, text and website visit made by the public in order to combat those who use complex communications to plot crimes.

Under the new proposals, each service provider will be ordered to collect and store information on calls, texts, emails and website visits so the authorities can access it when needed. The

information will include who is contacting whom, when and where and which websites are visited, but not the content of the conversations or messages.

Private telecommunications firms will be compensated for the costs of the extra work, at the taxpayer’s expense, and will be required to keep the data for a year.

Ruling out a national database, Miss Smith said: “There were two elements that I think people could be concerned about. One was the state holding the data. The other was the data all being concentrated in one place.

“It is to overcome those concerns about privacy that the proposal involves communication service providers retaining the data that comes from them and passes across their networks.”

By Robert Winnett Deputy Political Editor

GORDON BROWN was this week forced to drop controversial proposals to introduce a daily “attendance allowance” for MPs who turn up in Parliament.

The Prime Minister asked Sir Christopher Kelly, the anti-sleaze watchdog, to develop an alternative scheme before the summer following widespread opposition to Downing Street’s plan.

Mr Brown proposed the new allowance only last week to replace the current system which allows MPs to claim expenses to fund a second home.

The current system has been widely discredited after it emerged that MPs, including government ministers, were profiting from their expenses and buying luxury home furnishings.

However, it emerged that under the Prime Minister’s new proposals, MPs would be able to claim as much as before without having to provide any evidence that they had incurred genuine expenses.

David Cameron, the Conservative leader, and Nick Clegg, the Liberal Democrat leader, opposed the plan at an angry private meeting in Downing Street.

MPs had threatened to vote against the plans this week and Mr Brown abandoned the scheme to avoid losing a parliamentary vote.

No 10’s failure to persuade backbench Labour MPs to back the plan indicates the waning authority of Mr Brown. A ComRes/ The Independent opinion poll published on Monday found that the Conservatives have a 19-point lead over Labour.

A range of other, less controversial, proposals to clean up Parliament are now expected to be passed by MPs this week.

They include making them provide more information about any other jobs they undertake, tightening up the system which allows MPs representing outer-London constituencies to claim expenses for second homes and barring ministers with grace-and-favour homes from claiming expenses for private homes.

MPs will also have to pay more towards their pensions.

Sir Christopher, the chairman of the Committee on Standards in Public Life, has been asked to provide recommendations by July – when full details of MPs’ previous expense claims are due to be published.

However, he made it clear that he would complete his inquiry in his own time.

Iain Martin: Page 20