Twenty Labour MPs rebelled against party whips to oppose Conservative tax cuts for middle and high earners on Thursday, after a backbench revolt over shadow chancellor John McDonnell’s response to the budget.

The Liberal Democrats forced a vote in parliament over a package of tax cuts announced by Philip Hammond in Monday’s budget, and a total of 31 MPs voted against it. They included Lisa Nandy, Alison McGovern, Lucy Powell, Gareth Snell and Yvette Cooper.

Philip Hammond announced in Monday’s budget that he would bring forward Conservative manifesto pledges to raise the income tax personal allowance to £12,500, and the higher-rate threshold to £50,000, in April 2019. Analysis by the Resolution Foundation thinktank found that almost half the benefit of the policy would go to the top 10% of households.

Asked about the policy in interviews on Tuesday, McDonnell surprised many in his own party by saying Labour would not reverse the £2.7bn giveaway if it came to power in a general election in the next few months, because he did not want to “take money out of people’s pockets”.

Labour tabled an amendment to the House of Commons regulation implementing the tax cuts, setting out Labour’s alternative policy of taxing the top 5% of earners more heavily.

But with the amendment defeated, the frontbench was willing to let the tax changes go through “on the nod” – without a vote – until the LibDems objected. Sir Vince Cable, the Lib Dem leader, claimed that Labour whips had sought to obstruct MPs from entering the voting lobbies. Ultimately, the motion passed by 314 votes to 31.

Just voted with over 20 principled @labour MP's against tory tax cut for well off instead of more for #UniversalCredit. Shockingly labour whips in our lobbies trying to stop them in support of official Labour line not to oppose!! — Vince Cable (@vincecable) November 1, 2018

Cable said: “It is beyond belief that a party which claims to stand for the many, rather than the few, has chosen not to oppose the government on this. Using the money to fund universal credit or end the benefits freeze would have been far more progressive.”



The policy of increasing the personal tax-free allowance was championed by the LibDems during the coalition government, but as the threshold is increased further, the beneficiaries are those higher up the earning scale.

Nandy wrote on the blog LabourList that the government’s claim austerity was “coming to an end” should allow her party to be “much bolder about our opposition to these political choices, campaigning against austerity and highlighting its crushing impact on so many people who do not have a voice. Now is the time to roar”.

McGovern said: “This policy is very expensive. It cost the best part of £3bn in one year. There are several progressive choices that we could make to use that money to make a genuine difference in unlocking better incomes for those in poverty.”

Jonathan Reynolds, from Labour’s Treasury team, defended McDonnell’s stance, pointing out that some of the beneficiaries would be headteachers and other middle earners hit by austerity. “We oppose the budget and will vote against it, but we’re not going to promise to reverse the tax threshold changes because we already have better policy for a fully progressive tax system, and we’ve promised to only raise income taxes for the top 5% of earners,” he said.

Chief secretary to the Treasury Liz Truss seized on the divisions in Labour, telling the House of Commons, “even the shadow chancellor has welcomed our tax cuts”. She joked that it’s a “shame his party don’t agree with him … you can almost hear Momentum sharpening their pitchforks”.

She added: “I want him to know that all is not lost. Shadow chancellor, you have friends on this side of the House and there is space for you on our front bench. You might have to sit on the home secretary’s knee.”

Last year’s Labour manifesto promised that only the top 5% of earners, and corporations, would be targeted for tax increases, to fund spending pledges including the abolition of student tuition fees.