Jeremy Corbyn has suffered a revolt by around 20 Labour MPs after he refused to oppose a Conservative tax cut that will mainly benefit top earners.
The Labour leader ordered his MPs to abstain in the vote – in an apparent attempt to avoid offending middle-class voters – but the rebels voted against the Budget resolution.
In the Commons, a Treasury minister taunted John McDonnell, the shadow chancellor, over the revolt, jokingly inviting him to cross the floor and join the government.
Liz Truss said she could “almost hear Momentum shaping their pitchforks” at Mr McDonnell’s support for hiking the tax thresholds.
A respected think tank had found that the cost – almost £2.8bn – would overwhelmingly benefit wealthier households, with almost half the giveaway going to the top 10 per cent of earners.
The revolt was led by Lisa Nandy, a respected former shadow minister, who had warned the Labour leadership that the cut was “unacceptable” to many of the party’s backbenchers.
Yvette Cooper, David Lammy, Alison McGovern and Liz Kendall were among other prominent Labour MPs who joined the rebellion – a hike in the threshold before the 40p income tax rate kicks in to £50,000.
Mr McDonnell said he would not oppose the change because Labour is “not going to take money out of people's pockets”.
He argues Labour will only ask the top 5 per cent of earners to pay more, under planned increases in income tax rates that would kick in at £80,000.
Mr McDonnell had said he would not oppose the change because Labour is “not going to take money out of people's pockets”.
He argued Labour only wanted the top 5 per cent of earners to pay more, under planned increases in income tax rates that would kick in at £80,000.
Moments before the revolt, Labour’s attempt to change the Budget to bring in those changes was easily defeated by 313 votes to 246, a majority of 67.
Before the vote, Ms Nandy said: “It's completely right for Labour to say the richest 5 per cent should pay more.
“However, I believe we have to roar loudly on behalf of 4.1 million children in poverty in this country – and vote against the Tory tax cuts that according to the Resolution Foundation overwhelmingly benefit the rich.”
Philip Hammond announced, in Monday’s Budget, that he was bringing forward the increase in the thresholds, to next April, including an increase in the tax-free allowance to £12,500.
Mr McDonnell had refused to back down, saying. “We're not going to take funding away from people.
“Some of these are middle earners, head teachers and people like that, who've had a rough time of it, as well as everyone else.”
The stance was seen as evidence of the shadow chancellor’s increasing pragmatism, as he seeks to put Labour on course for an election victory.
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