How Labour’s tax row split the party

While Philip Hammond’s “austerity-ending” budget appears to have been generally well-received by the mainstream media, the public at large and restive Tory backbenchers, within the opposition it has ignited fierce debate.

The row that has ripped through Labour this week focuses on the shadow chancellor’s decision to back a tax cut for high-earners.

John McDonnell appeared at odds with many in his party when he reiterated his support for the 40p rate change, arguing that the “winners” would include mid-ranking doctors, late-career academics and school leaders, claiming these were hardly people he would consider “the rich”.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

Yet the move has sparked an ideological backlash from many MPs and grassroots members, and exposed a deep division over where the line falls between the “many” and the “few”, the slogan which drives Labour’s entire strategy.

Labour MPs concerned about McDonnell’s support for tax cuts for higher earners have tabled a budget amendment that would force the Government to publish an assessment of its impact on child poverty.

MP Nisa Nandy wrote in LabourList that the government’s claim austerity was “coming to an end” should allow her party to be “much bolder about our opposition to these political choices, campaigning against austerity and highlighting its crushing impact on so many people who do not have a voice. Now is the time to roar”.

Other senior MPs, including former leadership candidates Andy Burnham and Yvette Cooper, have also opposed the shadow chancellor’s stance.

Setting out the current conundrum facing the Labour leadership, Owen Jones in The Guardian writes. Jeremy Corbyn was elected to party leadership as an inflexible economic radical., yet “now his leadership stands accused, by Yvette Cooper, of backing regressive Tory income tax cuts that will overwhelmingly benefit the well-off, and all for the sake of cynical electioneering”.

Former Conservative voters earning £45,000 to £50,000 were crucial to the party’s surge at the last election, and McDonnell has repeatedly sought to keep them on side.

However, Stephen Bush in The New Statesman says that “this is not the beginning of an ideological split over economics”, arguing that “externally, no-one cares about the Budget and there are no votes to be lost over supporting a tax cut.”

“What should trouble Labour is that they have looked so incoherent and wobbly over a policy set two years ago, and that the Conservatives appear to have finally found a political narrative that might actually win over some of the voters they lost last time”.

Bush’s New Statesman colleague, Patrick Maguire, agrees. “That there was no coordinated consensus on the finer details of such an expensive policy where the will of the party ought to have been settled should set alarm bells ringing,” he writes.