POLITICS
06/09/2012 08:20 BST | Updated 06/09/2012 10:56 BST

Ed Balls Offers A Big Olive Branch To Vince Cable On The Mansion Tax

Shadow chancellor Ed Balls has sought to capitalise on internal Lib Dem leadership squabbles by sending a strong overture to Vince Cable, who has been tipped as a successor to Nick Clegg. In an interview with The Independent, published on Thursday morning, Balls says he "feels for" Cable, and suggests that Labour is more open to the Business Secretary's idea of a mansion tax on expensive properties than Nick Clegg's proposal for a temporary wealth tax on the super-rich.

A tax on properties worth more than £2m was floated by Cable ahead of this year's "omnishambles" budget but was blocked by senior Tories including George Osborne and the Communities Secretary Eric Pickles.

"The person thinking seriously about this was not Nick Clegg but Vince Cable. I feel for Vince and the extent of his frustration," says Balls. "But if [Cable] wants to channel those frustrations into discussions about how we can achieve growth and jobs in the future I'll start discussions with him tomorrow".

The Labour leadership feels that of all the senior coalition ministers only Vince Cable's ideas remain credible, partly because many of the predictions Cable made about the economy before the 2010 general election have now come to pass.

Labour senses that David Cameron's decision to send senior Tory MP Michael Fallon to the Business department was designed to constrict Cable and limit his ability to propose economic policies the Tories don't like. As such Ed Balls' comments on Thursday seem designed to exploit rumours that Cable is unhappy with Nick Clegg's leadership and the general thrust of the coalition's growth strategy.

Lib Dem MP Stephen Williams told The Huffington Post UK on Thursday that Ed Balls' overtures to Vince Cable were just "mischief making".

"Every time Ed Balls says anything you have to fillet the announcement for all sorts of layers of political intrigue. He's all about trying to separate Vince from Nick, or Nick from the rest of the party," he said.

"I don't think it's got anything to do with policy development. The Mansion Tax was around at the last general election, I don't remember Ed Balls or anyone else in Labour being keen on the idea at the time. In fact they spent a lot of time rubbishing our tax proposals."

Balls' intervention comes ahead of a new policy initiative by Labour, due to be launched later on Thursday, which the party describes as "stepping stones" towards the growth policies the opposition party will set out for the next general election. Labour feels it doesn't need to spell these out in terms this far away from 2015 because the world economy remains volatile and prone to further shocks from the Eurozone.

Nevertheless the party remains under pressure to say what it would be doing if it were in power, and was attacked by David Cameron at PMQs on Wednesday, who said Labour offered no alternatives to the coalition's recovery plan. Balls attempts to counter those claims in his interview, where he says his focus will be on sounding out ideas.

"I have thought a lot about it... I'm open to new ways of making our economy strong which requires investment in skills and universities and for the NHS," says Ed Balls, who next week will deliver a speech to the TUC's annual conference in Brighton. His speech to union leaders will be a critical test for the shadow chancellor, who was strongly criticised by several union barons earlier this year for suggesting Labour would be unable to promise greater public sector spending if it won the next election.

Labour hopes that the deteriorating economic outlook since Balls' unpopular speech to the Fabian Society in January means the unions will understand that the next government will still have a massive deficit to deal with when it comes to power. But so far union leaders remain furious at Balls' unwillingness to promise wage rises for public sector workers.

Nick Clegg has faced mounting criticism from his own MPs and peers in recent days, accused by one backbencher, Adrian Sanders, of "bumbling along". The Lib Dem peer Lord Oakeshott and friend of Vince Cable went even further, suggesting Cable would be a better leader for the Lib Dems.

Any Lib Dem leadership contest to replace Clegg would most likely be dominated by Cable and the party's president Tim Farron, and would see the party's relationship with Labour take centre stage. Tim Farron has been openly hostile towards Labour in recent months, using a Huffington Post interview earlier this year to lambast the party for "dishonouring the family".