Shadow Chancellor Ed Balls unveils spending cuts and borrowing billions (Photo: Reuters)
Shadow Chancellor Ed Balls denies anti-business agenda

If the Tories are planning a re-run of their successful 1992 election campaign slogan "Labour's Tax Bombshell", shadow Chancellor Ed Balls appears to have marched straight into the trap with his pledge to increase the top rate back to 50%.

Yet all the signs are that the Conservatives are rattled by the proposal. Because, whatever the claims about Labour going "back to the bad old days", the 2015 election will not be a repeat of 1992.

In that campaign, the Tories struck a chord with their claims Labour was offering a socialist agenda that was essentially anti-business, would drive enterprise out of the UK and tax even middle-income earners.

It was neatly summed up by the notorious Sun headline on polling day: "If Neil Kinnock wins today will the last person to leave Britain please turn out the lights."

Labour's tax bombshell
Conservative campaign poster, 1992

It worked, Labour lost against the odds and the party under Tony Blair and Gordon Brown spent the next years cosying up to the City and big business and being "supremely relaxed" about people becoming filthy rich. That worked as well.

But the economic crisis has changed the nature of the debate, at least in the public's mind – the one that counts come election day. And it appears that, while taxing the rich and tackling big business excesses are always popular, voters are no longer frightened off such schemes by talk of an exodus of entrepreneurs or tax avoiders.

I don't think it is justified when people have seen their taxes go up and most people have seen their living standards fall, cutting income tax for the highest earners.
Ed Balls

So it is probably no surprise that a Mail on Sunday poll - alongside headlines about socialism, back to the 1970s and economic illiteracy - showed 60% of voters backed the policy. And that is what is rattling the Tories.

All those old 1990s fears about destroying enterprise are being repeated, with Foreign Secretary William Hague telling the BBC's Andrew Marr show: "Ed Balls is sending the signal that a future Labour government will go back to higher taxes, higher spending and higher borrowing. It is anti-business."

They have been joined by some old Blairite Labour figures including multi-millionaires Lord "Curry King" Noon and ex-City minister Lord Myners.

But Balls, speaking on the same programme, rejected the notion it was anti-business, "This is not an anti-business agenda, it is an anti-business-as-usual agenda.

"I don't think it is justified when people have seen their taxes go up and most people have seen their living standards fall, cutting income tax for the highest earners which is what George Osborne and David Cameron have done."

There is a dispute over exactly how much the tax hike on those earning over £150,000 a year would raise, anywhere between £100m and £1bn or more. But that is not Balls' central argument; he is placing the emphasis on the "fairness" of his plan, using the Tories' own words that "we're all in it together" against them.

What the Tories will not do is attack the policy on the grounds it is wrong to tax the richest.

It was Labour's trap to increase the rate from 45% to 50% just months before the 2010 election in the expectation the coalition would cut it and could then be portrayed as standing up for the wrong people.

And that is what is at the core of this policy announcement, a battle between two parties standing up for different sections of society.

But it is also the case that Labour needs to move the debate away from the continuing economic recovery on to arguments over who will feel the effects of better times.

The Tories' strongest weapons will be to suggest that Labour's tax plans will undermine the recovery itself.