Angela Rayner and Andy Burnham differ with Keir Starmer over new rises

2022-09-26

Labour’s turmoil over income tax: Angela Rayner and Andy Burnham differ with Keir Starmer over new rises

Andy Burnham said he would reverse cuts to basic and top rates of income tax
But Sir Keir confirmed he backed Chancellor’s decision to slash the basic rate
And the Labour leader said he would reintroduce the top 45p rate of income tax

Labour’s tax policy descended into chaos yesterday as two senior figures contradicted Sir Keir Starmer over the 1p cut to income tax.

On the first day of the party’s annual conference in Liverpool, Andy Burnham, the mayor of Greater Manchester, echoed deputy leader Angela Rayner by saying he would reverse cuts to both the basic and top rate of income tax.

But moments later, Sir Keir confirmed he backed Chancellor Kwasi Kwarteng’s decision to slash the basic rate from 20p to 19p in the pound.

Mr Burnham told Sky’s Sophy Ridge on Sunday that it was not ‘the most targeted way of using the resources that we’ve got at this moment in time’.

Moments later, Sir Keir confirmed he backed Chancellor Kwasi Kwarteng’s decision to slash the basic rate from 20p to 19p in the pound

‘That’s my position, I don’t think it was a time for tax cuts. I think this is a time to support people through a crisis.’

Mr Burnham branded Friday’s mini-Budget as ‘the most flagrant act of vandalism on the social cohesion of our country’, adding that the Government had ‘drawn battle lines with ordinary working people’.

But just half an hour later, Sir Keir said he supported Mr Kwarteng’s decision to cut the basic rate of income tax, paid on earnings between £12,571 to £50,270, from April.

‘I’ve long made the argument that we should reduce the tax burden on working people,’ he told the BBC’s Sunday With Laura Kuenssberg programme.

‘That’s why we opposed the national insurance increase earlier this year, which of course the Government is now reversing.’

But the Labour leader said he would reintroduce the top 45p rate of income tax, paid by the highest earners, if he won the next general election.

‘I do not think that the choice to have tax cuts for those that are earning hundreds of thousands of pounds is the right choice when our economy is struggling the way it is, working people are struggling in the way they are and our public services are on their knees. I would reverse the decision.’

On Saturday, Miss Rayner sparked confusion by suggesting the party would reverse the income tax cut. She said: ‘We’ve said that, you know, the income tax cut is the wrong priority. So, yes, we don’t think that that’s the priority.

‘We will set out our tax proposals which will guarantee that those on the lowest wages, their cost of living will improve.

‘We will invest in high-skilled jobs and renewables, so we’re self-reliant on our energy needs. We’ll set out our proposals towards the next election, but we’ve been very clear that those with the broadest shoulders should pay more.’ Mr Kwarteng seized on the remarks, tweeting: ‘A Labour tax hike for millions.’

The Chancellor told MPs on Friday that millions of workers will keep more of what they earn when the basic rate of income tax is cut by 1p in the pound from April – a year earlier than planned.

Some 31 million will be better off by an average of £170 a year under the plans, according to Treasury estimates. It is the first cut to the basic rate of income tax in 15 years. In a shock move, the Chancellor also said the 629,000 earners getting more than £150,000 a year will no longer pay the top rate of 45p. From April, they will instead pay same 40p as those on over £50,271.

Mr Kwarteng insisted the move would ‘benefit the whole economy’, simplify the tax system and incentivise growth, but he faced a backlash from finance experts.

Mr Burnham also highlighted splits in Labour over electoral reform, saying he was ‘disappointed to hear the party say it is going to rule [it] out’.

In an appearance at a fringe meeting last night, he hinted at frustration with Sir Keir’s cautious approach. ‘We need to get a bit more on the front foot and say we’re going to fight back,’ he said, listing a string of policies he wanted Labour’s leader to announce, including renationalising trains and making decent housing a human right.

Tory MP Chris Clarkson said: ‘It’s the same old Labour, isn’t it? They’ve never had a tax rise they don’t like, but they have no policies of their own. They’re all so busy fighting each other that they don’t know what the policies are.’

A Conservative spokesman said: ‘Labour’s chaotic tax confusion belies a simple truth – Labour instinctively want to put up taxes, but desperately want to hide that from the public.’

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