Five ways he’ll punish middle England

John McDonnell set out his vision for how a hardleft labour government would run Britain. here, JAMES SLACK explains how this would hammer the middle classes.

INCREASE TAXES

WHAT HE SAID: Labour’s plan to balance the books will be aggressive… Where money needs to be raised it will be raised from fairer, more progressive taxation.

HOW IT WILL HIT YOU: For middle earners, Labour has drawn up plans for a 7 percentage points increase in National Insurance contributions. This would mean someone earning £50,000 would pay 49p in tax for every £1 they earn.

This is a major disincentive for people to earn more or gain promotion and an attack on aspiration. For higher earners, Mr McDonnell is considering a 60p top rate of tax which, as in Socialist France, would drive some wealth creators overseas.

HIKE INHERITANCE TAX

WHAT HE SAID: We will halt the Conservative tax cuts to the wealthy.

HOW IT WILL HIT YOU: Inheritance tax is levied at 40 per cent on assets above £325,000 for a single person, or £650,000 for a married couple. The Tory plan to raise the thresholds to £ 500,000 for singletons and £1million for married couples – meaning 94 per cent will pay no inheritance tax at all – would be scrapped.

Moreover, Labour is threatening to introduce a new ‘graded’ system which would clobber some families even harder.

PUSH UP INFLATION

WHAT HE SAID: We’ll use active monetary policy to stimulate demand where necessary. The mandate of the Bank of England to keep inflation low will be reviewed.

HOW IT WILL HIT YOU: Labour’s proposal is for ‘ people’s quantitative easing’ – or printing money - to pay for infrastructure and other pet projects. Experts say this would inevitably trigger inflation and, in the words of bank Governor Mark Carney, ‘hurt’ the less well-off and ‘imperil’ Britain’s economic recovery.

The Bank is currently charged with keeping inflation at two per cent. Mr McDonnell hinted at scrapping this and replacing it with targets on employment, growth and earnings. If inflation surges ahead, pensioners on fixed incomes will suffer a cut in real terms.

HAMMER BUY-TO-LET LANDLORDS

WHAT HE SAID: Billion pound tax breaks for buy-to-let landlords to carry out repairs will be cut. We will control exorbitant rents

HOW IT WILL HIT YOU: Labour pretend landlords all have large empires worth millions. In fact, many are middle-class families who rent out a single property they have bought as an investment or inherited.

Axing tax breaks for repairs, while simultaneously using the power of the State to keep rents artificially low, would make it no longer financially viable for many of the country’s 2.2m landlords – 1.6m of who have a mortgage. Economists have described rent controls as ‘the most effective technique presently known to destroy a city – except for bombing’.

HIT JOBS BY ATTACKING BUSINESS

WHAT HE SAID: There will be cuts to tackle the deficit… but our cuts will be to the corporate welfare system.

HOW IT WILL HIT YOU: Mr McDonnell wants a so-called Robin Hood Tax, which is a small charge on each of the millions of transactions executed by banks and other financial institutions. Experts say the costs will simply be passed on to savers and pensioners, on whose behalf the banks are trading.

He’d also reverse the planned cut in Corporation tax from 20p to 18p – threatening jobs.