John McDonnell has refused to back down after supporting Philip Hammond’s tax cuts for the middle classes in the face of intense criticism from the Labour ranks.
The shadow chancellor said he would not reverse changes that benefit higher earners because people like head teachers have had a “rough time” in recent years.
But centrist figures in the party criticised Mr McDonnell for backing perks for the wealthy while there are “people dying on British streets”, and branded the move “wrong”.
Andy Burnham, mayor of Greater Manchester, said when he heard that the party “would be backing Philip Hammond’s tax cuts for the richest” it sent a “shiver down my spine”.
In an article for The Times, he wrote: “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.”
Former work and pensions secretary Yvette Cooper tweeted: “People on £90-100k a year will get tax cut 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 are being cut, vital council services are being cut, police are badly overstretched. This is wrong. I cannot support it.”
Tottenham MP and former culture 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 according to @resfoundation analysis.”
Analysis by the Resolution Foundation think tank showed the tax cuts would “overwhelmingly benefit richer households”, with almost half (45%) set to go to the top 10% of households.
The cuts were criticised as “tax cuts for the rich” by shadow foreign secretary Emily Thornberry on Monday.
Mr McDonnell told BBC Radio 4’s Today programme that Labour would support the tax cuts on the basis they would “inject some demand into the economy”.
“What we’ve said is we will leave those personal allowances at whatever we inherit but our focus will be on a fair taxation system,” he added.
Mr McDonnell later defended his decision to back Mr Hammond’s income tax cuts.
He said: “We are not going to oppose it on the basis it will put more money in people’s pockets.”
The shadow chancellor said Labour would make the top 5% “pay that bit more”.
He added: “We are 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 have had a rough time as well as everyone else.”
The personal allowance and the higher rate threshold will rise from April in a move the Chancellor said would mean “a tax cut for 32 million people”.
The personal allowance, which is the minimum income someone can earn before paying tax, will rise to £12,500 from £11,850.
The higher rate threshold, the income at which someone becomes liable to pay the 40% tax rate, will rise to £50,000 from £46,350 at the same time.
Torsten Bell, director of the Resolution Foundation, tweeted: “Labour says it will support the income tax cuts announced yesterday – almost half of which goes to the top ten per cent of households alone.
“Nearly 90% goes to the top half. Not a good idea.”