Labour's 50p Tax Rate 'Very Bad For Economy'

David Cameron has said it would be "very bad" for the economy if Labour's proposed increase to the top rate of tax to 50% were to go ahead.

The Prime Minister's comments come after 24 heads of industry - including the former chairman of Marks & Spencer Sir Stuart Rose - criticised the move by shadow chancellor Ed Balls.

The 50p - or 50% - "additional rate" tax, which is payable on income above £150,000, was cut to 45% in April last year.

Mr Cameron says lowering the tax rate was "the right thing to do".

"What George Osborne and I did was right for the economy but politically difficult. Labour are now doing something that is politically convenient but very, very bad for the economy," he said.

Senior business figures have been quick to slam Ed Balls' plan

Mr Cameron has described the 50p tax rate as an "anti-business, anti-growth, anti-enterprise" measure.

But shadow business secretary Chuka Umunna disagrees with Mr Cameron, telling Sky News: "Essentially his argument is that rich people, more wealthy people, in our country will work harder if you cut their taxes and yet he has put the taxes up for everybody else by, for example, whacking up VAT at the start of his premiership and cutting benefits for in-work families."

And Mr Balls told the BBC that the Prime Minister and Chancellor George Osborne "know in their heart of hearts they can't justify a massive tax cut to the richest when everybody else is worse off and paying more tax".

"I think a fair approach to deficit reduction means those with the broadest shoulders need to bear their share of the burden," he said.

Sir Stuart Rose led Marks & Spencer for six years

"I don't think this is an anti-business move, I don't think it's bad for Britain. I think it is a fair way to get the deficit down."

The comments come as the 24 senior business figures wrote an open letter to the Daily Telegraph criticising the 50p tax rate, warning it would halt the economy's recovery and cost jobs.

The letter's signatories include Sir Stuart, West Ham United vice chairman Karren Brady, billionaire businessman Richard Caring and Kingfisher chief executive Sir Ian Cheshire.

"We think that these higher taxes will have the effect of discouraging business investment in the UK," the letter said.

Karren Brady is also a signatory

"This is a backwards step which would put the economic recovery at risk and would very quickly lead to the loss of jobs in Britain."

Sky's Political Correspondent Anushka Asthana has said of the letter: "Labour will tell you that one in three of the figures are Tory donors, with one - Karren Brady - even introducing the Chancellor at the party's annual conference. Still, they know it's news.

"And though they may be a little taken aback by the strength of the attacks former Labour figures, they won't be that surprised that they oppose the policy.

"Mr Balls has made a simple political calculation: that ordinary voters will not share the views of wealthy business leaders. And he may be right."

:: Watch Sky News live on Sky channel 501, Virgin Media channel 602, Freeview channel 82 and Freesat channel 202.

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