Labour backs Tory income tax cut for top 15 per cent of earners

The 40p tax rate threshold cut was pledged in the Conservative manifesto

Labour would back a Conservative move to cut the money raised by the 40 per cent rate of income tax, John McDonnell has said.

The Conservatives pledged to raise the threshold for paying the rate in their manifesto, effectively giving a tax cut to the roughly top 15 per cent of earners who pay it.

The shadow Chancellor said on Sunday he would support the move if it was unveiled in the Autumn Statement.

“It looks as though the threshold will be increased on Wednesday by the Government, and we would support that,” he said.

When it was put to Mr McDonnell that the policy was a “giveaway”, he replied: “It’s a giveaway to some people who need a tax giveaway at the moment because the Conservatives’ mismanagement of the economy is hitting them hard.”

The 40 per cent higher rate is currently paid on income over £43,001. The Conservative manifesto pledged to raise it to £50,000.

Labour’s support for the policy comes despite Mr McDonnell saying elsewhere in the interview that he would fund spending pledges by ending giveaways to the richest.

He cited corporation tax and capital gains taxes as two other tax cuts for the well off that he would reverse.

Mr McDonnell appeared on the same programme as Chancellor Philip Hammond. Mr Hammond warned that uncertainty caused by the Government’s Brexit negotiations meant the economy could be in for a bumpy ride.

The Government is due to issue its Autumn Statement on Wednesday this week, the first such budget statement since the EU referendum and since Theresa May came to power.

Other measures expected to be unveiled are over a billion pounds for road spending and a new fiscal framework that would allow renewed borrowing for infrastructure.