Miliband and Balls back equality report

Two leading Labour MPs have broadly endorsed a new think tank report calling for tax and benefit reform to reduce inequalities.

Communities minister David Miliband and Ed Balls, the chancellor's former chief economic adviser, were on Thursday attending the launch of the final report of the Fabian Society's Commission on Life Chances and Child Poverty.

The commission called for a new 50 pence top rate of tax and higher child benefit for second and subsequent children as part of a package of measures designed to close the income gap between the richest and poorest families, and move towards the government's target of eliminating child poverty, which is currently off course.

While neither Miliband nor Balls have given their full backing to the plan.

The two leading intellectual lights of the next generation of Labour MPs argue that the report has asked the right questions and has come up with many good answers.

Balls, who remains close to Gordon Brown, has endorsed a twin track approach of higher universal benefits alongside tax credits targeted at the poorest working families, but going high up the income scale.

A Fabian vice-chairman, Balls said he was "proud" of the report and praised its analysis.

He said increasing child benefit for second and subsequent children, currently more than £5 lower per week than payments for a first child, was "exactly the kind of thing we should look at".

The Normanton MP argued that public support could be achieved for higher taxes, as the government had shown with its 2002 National Insurance rise to pay for increased health spending, as recommended by a previous Fabian commission.

"That was the first time in a generation that a western government had made the case for a tax rise, not because of an economic problem but to make the positive case for supporting public services," he said.

"We did win the political argument then and at the following election, and we continue to sustain public support for that move."

However he added that not all the recommendations of that report had been implemented, distancing himself from calls for higher income tax rates.

Meanwhile Miliband, who has spoken of his concern at the government's failure to improve social mobility faster, was set to give the keynote speech at the launch of the report.

The former Downing Street policy chief, and close ally of Tony Blair, believes that existing policies do not go far enough to offer equal life chances to all children.