Key Budget votes ahead for Government as Labour tensions surface

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The Government is facing key Budget votes as Labour tensions on how to deal with the financial package set out by Chancellor Philip Hammond continue to simmer.

MPs will conclude their Budget debate on Thursday as ministers appear confident of support after the DUP signalled it would back the Tories.

After shadow chancellor John McDonnell said Labour would end the working-age benefit freeze if it gained power, the party is set to table Budget amendments calling for income tax rises for high earners.

Labour has put down amendments to the Budget resolutions demanding a hike in income tax to 45% on earnings above £80,000, and 50% for those above £125,000.

The move follows a heated row in Labour ranks after Mr McDonnell said the party would not oppose Tory tax cuts for the middle class.

The Labour leadership has said the party will not attempt to force a vote on the personal allowance changes – effectively abstaining.

Under Mr Hammond’s Budget plans the personal allowance, which is the maximum amount someone can earn before paying tax, will rise to £12,500 from £11,850.

The higher rate threshold, the income at which someone becomes liable to pay the 40% tax rate, will rise to £50,000 from £46,350 at the same time.

A number of prominent Labour MPs have called on the party to oppose the changes as they say they disproportionately benefit the better-off.

Labour MP Chuka Umunna told ITV’s Peston: “No, I don’t think these are the right kinds of things to be basically making a set of income tax changes which primarily benefit high earners. That’s obviously wrong.”

Mr McDonnell said Labour would not oppose the tax cuts as they would also benefit low and middle-income workers.

Speaking during the Budget debate, Labour’s Dame Margaret Hodge appeared to attack her party leadership’s stance on taxation as she spoke against “punishing the wealthy”.

Former minister Dame Margaret said: “We can’t keep promising excellent schools, effective policing and compassionate care if we refuse to raise the necessary money through tax.

“We can’t keep pretending that punishing the wealthy is the solution to underfunding.

“We need to have a truthful conversation with voters about how much we need to raise in tax to fund public services.”

Yvette Cooper, Labour chairwoman of the Home Affairs Select Committee, said Theresa May had reneged on her promises to prioritise people who were “just about managing” ahead of the wealthiest in the latest Budget.

She said: “They’re going ahead with over £1 billion in real cuts to tax credits and benefits this coming year for the poorest families.

“At the same time they are choosing to spend about the same amount of money on tax cuts for higher rate taxpayers, including those on more than £100,000 a year.

“A lone parent with a four-year-old working part-time could end up being nearly £3,000 worse off whereas the high earners end up being over £1,000 better off.”

SNP work and pensions spokesman Neil Gray criticised Mr Hammond for bringing forward a tax cut that “disproportionately benefits higher earners the most” instead of stopping the benefit freeze – which he described as the “single biggest cash grab” from low-income families.

Mr Gray added: “He keeps up an income squeeze on the many to pay for the biggest tax cuts for the few.

“That might have been the line from the shadow chancellor but of course they’re supporting this disgrace, and the tax shambles that Labour has got themselves in was compounded yesterday by Scottish Labour putting out a statement asking the Scottish Government to do the exact opposite of what the Labour frontbench here wants to do on tax.”

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