In one of his first big policy announcements to be made later today (January 4th), Shadow Chancellor Ed Balls will propose a new tax on the pension savings of more than 300,000 wealthier Britons, claiming that those earning more than £150,000 should only receive basic rate tax relief on their retirement savings.
Costing high earners thousands of pounds a year, the proposal would mean that they could only get tax relief of 20 per cent on their savings, compared with 50 per cent today, and 45 per cent from April this year.
Under the proposed scheme, the money raised, which is estimated to amount to around £1bn annually, would be used to subsidise private companies to take on people over the age of 25 who have been out of work for at least two years, which number around 129,400. The new workers would be offered 25 hours of work for six months and be paid at least the minimum wage.
Mr Balls went on to say that if the unemployed people refuse the offer of work, they would be excluded from claiming benefits. This plan follows his previously proposed £2bn tax on bank bonuses, which would partly fund a youth job scheme.
The powers that be in the party have been saying for some time that Labour needs to set out concrete policies this year in a bid to boost its economic credibility and to answer Tory claims it has no strategy for tackling welfare costs.
However, Prime Minister David Cameron said the Government’s welfare-to-work scheme was “massive”, while the Treasury said Labour was trying to spend the same money twice and that Mr Balls had already earmarked cuts in pension tax relief to reverse austerity measures.