Labour's Shadow Chancellor Ed Balls
Labour's Shadow Chancellor Ed BallsReuters

Shadow Chancellor Ed Balls has announced a raft of economic pledges that a Labour government would enforce if it wins the next election, including raising the top rate of tax to 50% for the country's highest earners.

In a speech on Saturday at the Fabian Society, Balls said a Labour government would reintroduce the 50p top rate of income tax for those earning over £150,000.

The last Labour government raised the upper tax band from 40% to 50% in 2010 in response to the recession, but the coalition has since cut it to 45%.

Labour said the move was part of a package that it claimed would balance the books, deliver a surplus on the current budget and get the national debt falling in the next Parliament.

Balls said: "The latest figures show that those earning over £150,000 paid almost £10bn more in tax in the three years when the 50p top rate of tax was in place than when the government conducted its assessment of the tax back in 2012.

"When the deficit is still high... it cannot be right for David Cameron and George Osborne to have chosen to give the richest people in the country a huge tax cut." He went on to say a Labour government would "reverse this unfair tax cut for the richest 1% of people in the country".

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But Balls avoided the issue of planned Labour cuts, saying: "We won't be able to reverse all the spending cuts and tax rises that the Tories have pushed through. We will have to govern with less money, which means the next Labour government will have to make cuts, too.

"No responsible Opposition can make detailed commitments and difficult judgments about what will happen in two or three years' time without knowing the state of the economy and public finances that we will inherit."

Balls said a Labour government would abolish the "discredited" rolling five-year targets and legislate for new fiscal rules within 12 months of the general election, and ask the Office for Budget Responsibility to independently audit the pledges made in their manifesto.

But Conservative Treasury minister David Gauke questioned the value of a top rate tax rise. He said: "Under this government, the wealthiest are paying a greater share of income tax than they ever have before and we are bringing in a whole host of measures to ensure that the wealthiest pay the most.

"If Labour want to deliver a reduced deficit, given their opposition to any of the spending cuts we're putting in place, then I'm afraid they're just going to have to put up taxes on everyone - not just the top earners."