John McDonnell faces down Labour critics and vows to back tax cuts for the rich

Posted On: 
30th October 2018

John McDonnell has defied his Labour critics and insisted he would not "take money out of people's pockets" by overturning Philip Hammond's tax cuts for the rich.

John McDonnell has been criticised by Labour colleagues.
Credit: 
PA Images

Former Labour minister Andy Burnham has led opposition to the Shadow Chancellor's stance, telling The Times it had "sent a shiver down my spine" and reminded him of when Labour failed to oppose benefit cuts.

In his Budget yesterday, Philip Hammond pledged to raise the threshold at which people start paying the 40p rate of income tax to £50,000 from next April, handing a tax cut to millions of higher earners.

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According to a damning analysis by the Resolution Foundation think tank, the move would benefit the richest tenth of households 14 times as much as the poorest.

On Radio Four's Today programme this morning, Mr McDonnell said: "We’ll support the tax cuts at the moment on the basis that it will inject some demand into the economy."

In response Mr Burnham, who is now mayor of Greater Manchester, said: "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 top priority when our police are so stretched and there are people dying on British streets for want of a roof over their head."

He added: "I am hoping that I misheard John’s position or that he made a quick decision before he had time to go through all of the budget analysis. Either way, I would advise him to avoid the mistake we made in 2015.

"Don’t let this run for days and then come up with a compromise to save face that pleases no-one. Hammond’s package couldn’t even be justified in the good times and certainly not now. Labour should oppose it - starting today."

Senior Labour figures Yvette Cooper, David Lammy and Lisa Nandy have also criticised the Shadow Chancellor.

Speaking to journalists in the wake of the row, Mr McDonnell made clear he had no intention of backing down.

He said: "We're not going to oppose (the tax cut) on the basis that we'll put more money in people's pockets. Our position is very, very clear - we'll introduce our own income tax proposals. We set them out at the general election, which was a new rate of 45p for £80,000 and above and then a 50p over £123,000. So we want a fair taxation system where the top 5% pay that bit more, simple as that.

"We're not going to take funding away from people, some of these are middle earners - we're talking about headteachers and people like that who've had a rough time, as well as everyone else.

"I can understand it. They're dealing with the issue as it now is, but what we're saying is we want a general election. We can then introduce a fair taxation system and on that basis we'll be able to fund our public services."

Mr McDonnell added: "I completely understand where Andy's coming from, but 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.

"What we're keen to do is not take money out of people's pockets. People at the lower end and 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."