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Almost TWO MILLION workers could face Labour tax squeeze

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Almost two million workers face significant tax hikes if Jeremy Corbyn wins the race for No 10, independent experts warned last night.

The Labour leader has told those earning more than £80,000 a year that they will be liable for higher income tax.

But in a new analysis, the Institute for Fiscal Studies said this would mean income tax hikes for 1.6million – the top five per cent of income tax payers – by the next tax year, 2020/21.

And by 2023/24, even more people will have been dragged into the net, with 1.9million paying higher income tax as wages rise naturally – the top six per cent of income tax payers.

Almost two million workers face significant tax hikes if Jeremy Corbyn (pictured) wins the race for No 10, independent experts warned last night

Tories blast claims of UK’s ‘rising poverty 

Labour sparked a furious election row last night after claiming poverty in Tory Britain is more ‘visible and widespread’ than it has been in decades.

John McDonnell will today unveil pledges to reverse the ‘damage’ of a decade of austerity.

The document – entitled Poverty Britain – claims wage stagnation under the Conservatives has cost the average worker around £6,300 in lost earnings.

But the Tories disputed the claims last night and issued a point-by-point rebuttal as part of its new ‘Labour Lies Unit’.

The party said in recent months, wages have risen at their fastest in more than a decade, with the living wage providing a boost for low earners.

Mr McDonnell, the Shadow Chancellor, will say today: ‘Poverty in Britain is now the most visible and widespread it has been in decades.’ 

The report said food banks have given out 65 million meals in the last five years, the equivalent of a meal for every person in the UK. The Tories dispute this.

The Opposition said there are more than 20 million adults with no savings, a rise of nearly three million since 2010/11.

But the Tories countered that the total saved by people in the UK was going up.

Labour said there had been a near 50 per cent increase in the number of children in severe low income and deprivation between 2011/12 and 2017/18.

However the figures were the same as in Labour’s last year of power, claimed the Conservatives.

Mr McDonnell said that since 2010, children growing up in relative poverty have increased by half a million. But the Tories said numbers living below the threshold of ‘low income and material deprivation’ have fallen since 2010.

Labour said in-work poverty has increased by 1.5 million since 2010/11, but the Conservatives said the proportion of jobs that are low paid is at its lowest since records began two decades ago.

Therese Coffey, the Work and Pensions Secretary, said: ‘Average wages have outpaced inflation for the last 20 months.’

The IFS said someone with an annual taxable income of £100,000 would lose around £1,000 a year under Labour’s plans, while those on £150,000 would lose more than £5,000.

At the same time, it pointed out that the proportion of income tax paid by top earners had already risen substantially over the past decade. The top five per cent now contribute half of all income tax revenues, up from 43 per cent just before the financial crisis.

On top of this, the IFS warned there was also a small risk that Labour’s tax hikes could end up raising less money because people could take steps to reduce their pre-tax income, such as putting more money into pensions.

It came as a former shadow chancellor made the bombshell claim that Labour’s spending plans are likely to mean soaring taxes for all, not just the rich. Chris Leslie, an ex-Labour MP who is now deputy leader of the Independent Group for Change, warned a Corbyn government could mean higher council tax as well as extra taxes on pensions.

Labour has announced plans for a 45 per cent income tax rate on anyone earning more than £80,000 a year. And those on taxable incomes of £125,000 or more would be hit with a 50 per cent rate. But they have pledged that 95 per cent of the population would not pay extra income tax or national insurance.

Launching his report, IFS research economist Xiaowei Xu said: ‘Labour are proposing a substantial tax rise on the highest-income three per cent of adults.

‘This could raise some money – about £3billion a year as a central estimate – and could have some effect on reducing income inequality. But it comes with risks, as those with the highest incomes are likely to respond to the tax rise by reducing their pre-tax incomes.

‘The likely extent of these responses is highly uncertain, though the more Labour reduces the scope to shift income into more lightly taxed forms like capital gains, the more revenue its income tax proposal would be likely to raise.’

The IFS research found that tax takes would be greater for those with higher incomes.

It said someone with an annual taxable income of £100,000 would lose £1,000 a year, whereas someone on £150,000 would lose £5,375.

The proposals would affect ever more people over time, since the £80,000 threshold would be frozen in cash terms.

John McDonnell (pictured on Tuesday) will today unveil pledges to reverse the 'damage' of a decade of austerity

John McDonnell (pictured on Tuesday) will today unveil pledges to reverse the ‘damage’ of a decade of austerity

Around 1.9million people will have incomes exceeding £80,000 in 2023/24, the top six per cent of income tax payers or the top four per cent of adults – a smaller slice of the population as so many pay no income tax due to the £12,500 personal allowance threshold.

The IFS said the revenue Labour’s tax proposals would raise is highly uncertain, and depends on the extent to which people take steps to reduce their taxable incomes in response.

If no one changed their behaviour, the tax rises would raise around £10billion per year on average between 2020/21 and 2023/24.

Will they scrap student debt billions? 

Labour opened the door to writing off billions of pounds in student loans yesterday.

The party has already pledged to abolish tuition fees and bring back maintenance grants – and Shadow Chancellor John McDonnell suggested that the party could go further and write off existing debt.

But Shadow Treasury colleague Anneliese Dodds later said the policy would not be in the manifesto as it was currently unaffordable.

Speaking on BBC Radio 4’s Today programme, Mr McDonnell said the system did not work, and that the Government has already had to write off large amounts of debt that has not been repaid. 

He added: ‘There is, I think, an approach that has to be taken that looks at existing debt, and we will be looking at some of these issues in the coming weeks.’

University fees are set at up to £9,250 a year, and students can be left tens of thousands of pounds in debt when they graduate.

Official figures show that the outstanding student loan book hit £121billion in March. It is on course to reach £450billion by 2050.


The IFS said a reasonable central estimate for the revenue raised is around £3billion per year, but it might even cost the Treasury around £1billion.

Mr Xu added: ‘It is worth noting that we are already extraordinarily dependent on this small group of individuals for tax payments.

‘Perhaps contrary to popular belief, this group has seen the biggest tax rises over the last decade. Countries that raise more tax than us tend to have much higher taxes on people on average incomes, and not just rely on the highest income individuals for tax revenues.’

Treasury minister Simon Clarke said: ‘Jeremy Corbyn is planning a reckless spending spree that everyone will end up paying for.

‘Labour’s sums don’t add up. They say only the top earners will pay but the revenue won’t come close to covering their £1.2trillion spending pledges they’ve made so far. Proof that Corbyn’s Labour will result in higher taxes for workers, businesses and families.

‘Only a majority Conservative government will get Brexit done and manage the economy responsibly, providing the certainty that families and businesses need to plan for the future.’

Mr Leslie, shadow chancellor in 2015, endorsed a new report issued by Mainstream, the anti-extremism campaign chaired by former Labour MP Ian Austin.

The report said Labour’s spending plans were far too high to be funded merely from tax rises on the top five per cent.

He said: ‘This report is a very timely call for John McDonnell to come clean on how much Corbyn’s Labour will cost ordinary people.

‘It’s ludicrous to suggest that Labour could fund its ever-growing and expensive wish-list simply with tax rises on just a tiny number of very wealthy people.

‘It will be ordinary families who will end up paying for things like making universities free for the children of millionaires, or giving Premier League footballers free broadband and free car loans.’ 

Local chairman quits with a swipe at ‘clown’ party leader

by Policy Editor 

John Thomas resigned from Labour after 34 years – insisting Claudia Webbe's (pictured) selection in Leicester East was a 'fix'

John Thomas resigned from Labour after 34 years – insisting Claudia Webbe’s (pictured) selection in Leicester East was a ‘fix’

A furious chairman of a local Labour party has quit after a Corbyn ally was parachuted in to replace the disgraced MP Keith Vaz.

John Thomas, 75, resigned from Labour after 34 years – insisting Claudia Webbe’s selection in Leicester East was a ‘fix’.

In his stinging letter of resignation, he attacked Jeremy Corbyn’s Brexit policy, writing: ‘I can no longer follow the clown that leads the Labour Party, he is heavily influenced by the Trotskyite Len McCluskey [Unite union leader] and is now the hokey cokey leader, in out, and shake it all about.

‘He has turned this great party into a laughing stock.

‘I am also shocked that you have chosen a candidate who is a councillor in Jeremy Corbyn’s Islington CLP to be the Labour candidate for Leicester East for the next general election. Where is the democracy in all this? It is a fix and a disgrace.’

Mr Vaz, who had been the local MP since 1987, stood down after being handed a six-month Commons ban for offering to buy cocaine for two male prostitutes.

Miss Webbe, who is a member of Labour’s ruling NEC, will now defend the seat’s 22,000 majority. 

A Labour Party source said: ‘Claudia Webbe is a BAME woman who was born in and grew up in Leicester. 

‘Her knowledge of the constituency, her extensive experience as a councillor and as a campaigner for equality for all ethnic minority groups make her an excellent candidate.

‘The panel that chose her as a candidate included regional and local constituency representatives.’


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