JOHN McDonnell has brushed off criticism from senior Labour figures after he made clear that a future Labour Government would support Philip Hammond’s Budget tax cuts for the better-off.
The Shadow Chancellor declared: “We’re not going to take money out of people's pockets; it’s as simple as that."
He stressed that if Labour won the next General Election, it would introduce a fairer tax system, which would involve taxing the top five per cent of earners more, including a new income tax rate of 45p for those earning more than £80,000 a year.
In the Budget, the Chancellor announced a raising of the tax-free personal allowance to £12,500 from £11,850 and hiking the higher income tax rate threshold from £46,350 to £50,000 from next April; a year earlier than expected.
The Resolution Foundation think-tank calculated that the tax cuts would "overwhelmingly benefit richer households"; 84 per cent of the reductions would go to the top half of earners, it said.
In a briefing to journalists at Westminster, Mr McDonnell explained: "We're not going to take funding away from people, some of these are middle earners; we're talking about head-teachers and people like that, who've had a rough time, as well as everyone else.”
He added: “What we're keen to do is not take money out of people's pockets. People at the lower end and[on] middle income have been hit hard by austerity itself. What we want to do is not take demand out of the economy either but the whole focus is around our fair income tax system."
But his position did not find favour with some senior Labour colleagues.
Backbencher David Lammy tweeted: “We should not be supporting tax cuts that disproportionately help the wealthy. Tory cuts will benefit rich families 14 times more than the poor according to @resfoundation analysis.”
His Labour colleague Yvette Copper, who chairs the Commons Home Affairs Committee, noted: “People on £90-100k a year will get tax cuts worth £860 in April. Those on £125k will get £600; far more than low paid workers at a time when child poverty is going up, benefits being cut, vital council services being cut, police badly overstretched. I cannot support it.”
Former Cabinet minister Andy Burnham, the Mayor of Manchester, wrote in The Times: “I can’t see how tax cuts for the wealthiest can be the top priority when our police are so stretched and there are people dying on British streets for want of a roof over their head.”
Elsewhere, Angela Rayner, the Shadow Education Secretary, also took to social media to say the Chancellor had “delivered a tax windfall to the richest households in Britain…while the poorest continue to face benefit cuts, a damning report has revealed”.
During the Budget statement when Mr Hammond made his tax cuts announcement Emily Thornberry, the Shadow Foreign Secretary, tweeted: “There we are: tax cuts for the rich and they are coming earlier.”
Yesterday at Holyrood, Derek Mackay, the Scottish Finance Secretary, intervened in the Labour row, noting how it was “interesting” that Mr McDonnell had announced Labour would “not even overturn the Tory tax cuts for the richest in society”.
“The Labour Party communication system has broken down in the same way that its calculator never worked in the first place,” he told MSPs.
Mr Mackay pointed out how the SNP Government was allocating more money to the NHS than the Labour Party had proposed to allocate if it had won power at the previous Scottish parliamentary elections.
“With the pay uplift, we departed from the public sector pay cap even though the Chancellor did not fund it; where the Labour Party is in power, it will lift it only if the Chancellor pays for it. It is all talk with Labour; with the SNP the people get real action and investment in our public services,” he added.
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