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John McDonnell stunned his party yesterday by backing the tax cuts for high earners announced in the Tories’ Budget.

The Shadow Chancellor faced a backlash from Labour colleagues after saying he wouldn’t scrap Philip Hammond’s pledge to lift the 40p tax threshold for high earners to £50,000 a year earlier than planned.

The move also opened up a clear divide between Labour and the SNP, who have confirmed that they will continue to make high earners pay more under Scotland’s separate tax system.

(Image: AFP/Getty Images)

McDonnell backed Hammond’s tax cuts despite damning analysis by the independent Resolution Foundation think tank, who said the move would benefit the richest tenth of households by 14 times as much as the poorest.

The Shadow Chancellor said Labour would aim to end austerity by increasing taxes on the top five per cent of earners and reversing cuts to corporation tax instead.

Finance Secretary Derek Mackay said Tory-style tax cuts would be “impossible” to pass at Holyrood and that the was “proud” of the Scottish Government’s “fairer” approach to taxation.

It came after First Minister Nicola Sturgeon had signalled that she won’t pass on Tory tax cuts for the well-off.

Since April, people in Scotland have been paying 41p on earnings over £43,431, while taxpayers elsewhere in the UK paid 40p on earnings over £46,350.

The divide between Scottish and English rates will increase even further if Mackay does not close the gap when he outlines his Scottish Budget plans on December 12.

He told MSPs yesterday: “I take some pride in the fact that we’ve ensured we have the fairest income tax system anywhere in the United Kingdom – and for a majority of people, they pay less tax and this is the lowest taxed part of the UK.

“The Tories have once again chosen tax cuts for the richest in society.

“We will choose a fairer, more progressive tax.”

(Image: Daily Record)

Scottish Greens leader Patrick Harvie, whose MSPs have helped the SNP

pass their budgets in recent years, warned Mackay against following Hammond’s lead.

He said: “Instead of a budget to repair the harm done by austerity or respond to the climate emergency, we saw a budget which once again gives the biggest tax cuts to the richest 10 per cent and continues the reckless pursuit of an unsustainable economy.

“Derek Mackay must resist delivering a tax-cutting budget for the wealthy, otherwise he must know a deal with the Greens would be impossible.”

McDonnell defended his promise not to oppose Hammond’s tax cuts for

high earners in an interview about the Budget.

He said: “We’re not going to take money out of people’s pockets, simple as that.”

He added that people like head teachers, who will benefit from the announcement, have had a “rough time” in recent years.

(Image: 2015 Getty Images)

But former Labour minister Andy Burnham, who is now the mayor of Greater Manchester, branded the move “wrong”.

He 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”.

Burnham added: “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.”

The Resolution Foundation said almost 90 per cent of the income tax cuts announced by Hammond on Monday would go to the top 50 per cent of earners by the end of the current parliament – and almost half to the top 10 per cent.

They added the overall package of tax and benefit changes announced by the Tories since 2015 would see the richest fifth of households gain £390 and the poorest fifth lose £400.

Resolution Foundation director Torsten Bell said while a £1.7billion cash injection for Universal Credit was a “seismic shift” in the UK Government’s approach to public finances, it represented “an easing rather than an end to austerity for low and middle-income families”.

He tweeted: “Labour say they will support the income tax cuts announced. Nearly 90 per cent goes to the top half. Not a good idea.”