Cruddas breaks ranks to demand tax rises

Tax rises for the well-off should form a key part of Gordon Brown's political fightback, the influential Labour backbencher Jon Cruddas said last night.

On the day Chancellor Alistair Darling confirmed that the Prime Minister had accepted the need to cut public spending, Mr Cruddas called for a number of tax increases to redistribute wealth and allow Labour to regain political momentum – becoming the first senior Labour figure to do so.

Amid a fresh bout of speculation that Mr Brown could be ousted before the general election, Mr Cruddas, who could be a contender in any future leadership election, warned: "Our lack of story and radicalism means we appear paralysed by a form of defeatism; of meekly accepting imminent Tory victory."

His call for tax rises will not be welcomed by Mr Brown as he tries to redraw the battle lines with the Tories over spending. But ministers admit privately that the hole in the public finances would probably need to be filled by a combination of higher taxes and lower spending.

Addressing the left-of-centre pressure group Compass, Mr Cruddas called for greater "tax justice", including closing tax havens and more equal distribution of income and wealth; reform of capital gains tax; index-linking benefit levels, pensions and the minimum wage to average incomes; replacing tuition fees with a "graduate solidarity tax" and a high pay commission to ensure a fair balance between high and low paid workers in the same company.

Mr Cruddas, who enjoys strong support among the Labour grassroots, said Labour must reassert what it stands for. He insisted that an election defeat was not inevitable. Claiming that the Tories have a "glint in the eye when they talk about cuts", he said: "For me the question is why can we not lay a glove on them; we are mute. I would suggest it is because we have lost our language, our empathy, our generosity; because we have retreated into a philosophical framework of the right. This is not an internal debate. This is about protecting the most vulnerable through proudly defending a notion of a modern social democracy."

Speaking in Cardiff, Mr Darling defended the role of an "active state" and insisted the Tories were wrong to want to cut public spending. But he confirmed that he had persuaded Mr Brown to be more open about the need for eventual cuts. He said: "To cut spending now would kill off the recovery. But, when the recovery has been established, all countries must rebuild their fiscal strength."

The Chancellor, who will outline specific cuts in his pre-Budget report in November, said the Government faced "hard choices" but would not flinch from "difficult decisions".

Jon Cruddas is the next subject for our You Ask The Question series. Click here to mail your questions.