Labour chaos over Budget tax cut
Party at war as Shadow Chancellor backs move that’ll help middle class
Shadow Chancellor John Mcdonnell faced a Budget revolt last night after senior Labour figures condemned his decision to back the Government’s middle-class tax cuts.
In a surprise move, he said Labour would not oppose or reverse the £9.6billion package of income tax cuts unveiled by Philip hammond on Monday.
‘we will support the tax cuts at the moment on the basis that it will inject some demand into the economy,’ he said. Mr Mcdonnell added that Labour would focus instead on drawing up plans for a ‘fair taxation system’ in which the top 5 per cent of earners would be asked to ‘pay a bit more’.
But he faced criticism last night from senior Labour figures for supporting tax cuts that will benefit the better-off while many benefits are frozen. Mr hammond announced on Monday that he was bringing forward a Tory pledge to raise the thresholds for both basic-rate and 40p rate taxpayers to next year. Basic-rate taxpayers will gain £130 a year from next april, while those on the higher rate will gain £860.
The Chancellor yesterday said it was ‘right and moral’ for the Government to deliver on its manifesto tax pledges.
he said many middle-income workers in schools, hospitals and the police had been dragged into the higher rate of tax, adding: ‘It’s important to raise all of these thresholds.’
But senior Labour figures condemned the tax cuts.
Former Labour Cabinet minister andy Burnham described them as ‘morally indefensible when some people are struggling to feed and clothe their children’.
Mr Burnham, now the Labour mayor of Manchester, said he was ‘at a loss to understand’ why Labour was backing the package.
he suggested Labour leaders were ‘spooked’ by polls showing the Tories ahead, adding: ‘I honestly can’t see how Labour’s position will hold.
‘It is not just that the distribution is so unfair. I can’t see how tax cuts for the wealthiest can be the priority when police are so stretched and people dying on British streets for want of a roof over their head.’
Education spokesman angela Rayner said tax cuts for those on higher incomes were ‘the wrong priority’, while shadow foreign secretary Emily Thornberry described them as ‘tax cuts for the rich’.
Former minister Yvette Cooper said: ‘People on £90,000 to £100,000 a year will get tax cuts worth £860 in april, those on £125,000 will get £600 – far more than low-paid workers, at a time when child poverty is going up, benefits are being cut, vital coun-
‘This is wrong – I cannot support it’
cil services are being cut, and the police are badly overstretched. This is wrong – I cannot support it.’
Ex-minister david Lammy said: ‘we should not be supporting tax cuts that disproportionately help the wealthy. Tory cuts will benefit rich families 14 times more than the poor.’
Mr Mcdonnell’s move appeared to be driven by electoral calculations, with the Labour leadership anxious not to alarm millions of workers who will benefit from the tax cuts.
Theresa May insisted yesterday that the Budget was not designed to pave the way for a snap election, adding that it ‘would not be in the national interest’.
Mr Mcdonnell acknowledged yesterday that raising the 40p threshold would result in the sort of ‘tax cut for millionaires’ he has previously criticised. But he said: ‘we’re not going to take funding away from people. Some are middle earners – headteachers and people like that who’ve had a rough time.’
he said he understood Mr Burnham’s criticism, but added: ‘what we’re into is trying to ensure that we have a fair taxation system based upon new proposals on income tax overall, which he supported.’
Labour misgivings were fuelled by analysis by the centre-Left Resolution Foundation think-tank, which claimed the cuts would ‘overwhelmingly benefit richer households’, with 45 per cent set to go to the top 10 per cent of households alone.